On May 25, 2023, Belgium enacted the Mobility Act, which transposes Directive (EU) 2019/2121 (the EU Mobility Directive). The EU Mobility Directive creates a comprehensive framework for corporate cross-border restructurings. It builds on the foundations of the 2005 Directive on cross-border mergers.

Context

Strelia a assisté un franchiseur dans le cadre d’une procédure introduite contre une caution personnelle – gérant de société – qui souhaitait échapper à ses obligations de caution en invoquant sa faillite personnelle. Selon la Cour de cassation, un dirigeant d’entreprise ne peut cependant pas automatiquement être qualifié d’entreprise et faire aussi facilement aveu de faillite.

Strelia assisted a franchisor in an action brought against a personal surety – a company director – who attempted to escape his obligations by filing for his personal bankruptcy. However, according to the Court of Cassation, a company director cannot automatically be considered as an enterprise and therefore is not capable of filing for bankruptcy.

Strelia stond een franchisegever bij in een procedure tegen een persoonlijke borgsteller – een bedrijfsleider – die zich aan zijn verplichtingen als borg wilde onttrekken door zichzelf failliet te laten verklaren. Echter, volgens het Hof van Cassatie kan een bedrijfsleider niet automatisch als onderneming gekwalificeerd worden en dus niet zomaar zijn faillissement aanvragen.

Ongoing innovation of the Belgian insolvency law : change of the current law and a new proposal for a European bankruptcy Directive !

Insolvency law in Belgium will be subject to a lot of change, through the transposition of two consecutive directives of the European Union and the implementation of the case law of the European Court of Justice. The first changes in the law are imminent. The main tendencies of the upcoming evolution are explained in the contribution below.

How the Belgian Cour de Cassation qualifies a director of a company as an “enterprise”

Since the entry into force of the new Belgian Code of Economic Law (‘BCEL’) it is possible for a company director, in its personal capacity, to be qualified as an “enterprise” and consequently to be declared bankrupt.

The definition of an enterprise is set out in Article I.1, 1° BCEL and relates to the following organisations:

a) any natural person who independently performs a professional activity;

When a company faces financial distress, concessions are to be made and decisions to be taken in view of its turnaround. In the ordinary course of business, the shareholders bear the entrepreneurial risks and have the ultimate decision-making power. In judicial reorganisation proceedings, the risk and also the decision-making power, is shifted to the creditors as they are the ones having to make the efforts and concessions.

This memorandum gives a short summary on the bankruptcy petition and general insolvency filing obligations of the management body of Luxembourg companies, i.e. actions the managers or directors must perform, in what form and the applicable penalties in the event of non-compliance with their obligations.

This memorandum is based on Luxembourg laws and is subject to any change in law or interpretation or application thereof that may take effect after such date.

1. Legal overview of bankruptcy

1.1 Conditions that amount to bankruptcy