The long anticipated law of 7 June 2023 implementing the European Directive on restructuring and insolvency brings about a major reform of Belgian insolvency law. Among various other innovations, it introduces a new judicial reorganisation through collective agreement for large enterprises.

The new law will apply to all procedures opened as from 1 September 2023.

In this second of two client alerts, we will examine to which extent creditors can seek to impose a debt-to-equity swap on shareholders within the new judicial reorganisation for large enterprises.

Jersey continues to be the offshore jurisdiction of choice for restructurings involving debt for equity swaps (particularly restructurings of UK and international corporate groups). But what makes Jersey so attractive for this type of transaction?

The Court of Cassation recently delivered an important decision regarding the accounting and tax treatment of debt restructuring operations performed by way of a debt-equity swap. Although the decision has the merit of being clear, its effective consequences are that tax will remain a key consideration for deciding whether to perform such operation. One may wonder whether that is sensible at a time when company groups may have to envisage such operations to save related entities from bankruptcy.

Debt waiver - Basic principles