AUTOMATIC TEMPORARY PROTECTION OF COMPANIES
In the meantime it has become clear that COVID-19 already has and will have a serious impact on the economy due to the strict governmental measures issued mid-March. A number of protective measures were announced to remedy somehow the financial impact for companies (e.g. payment facilities and premiums). In many cases, these supporting measures will not suffice. This creates a substantial risk that healthy companies too will not survive this crisis on one hand, as well as that courts will be overflown with bankruptcy proceedings and requests for judicial reorganisation on the other hand.
Those problems are now being attended to by a legal initiative which grants an automatic protection to companies facings insolvency during (and due to) this crisis. To obtain such protection, Royal Decree nr. 15 was issued on April 24th, regarding a temporary suspension in favour of companies during the COVID-19-crisis.
- Which kind of measures are imposed by the Royal Decree :
The temporary moratorium consists of the following measures that automatically will apply:
- companies cannot be declared bankrupted at the request of creditors (of course you can still decide to file bankruptcy yourself, but without having an obligation to do so);
- no protective or executive attachments can be made (except for real estate);
- the payment-terms in a re-organisation plan are automatically extended;
- agreements cannot be terminated unilaterally or in court.
These measures apply only to the companies whose difficulties arose during the COVID-19-crisis, and do not apply to companies that already structurally ceased their payments on March 18th, 2020. This assessment doesn’t belong to the creditors, but to the court.
The President of the Commercial court can be requested to suspend these measures with regards to a specific company, which will of course have to be motivated (contradictory proceedings).
- What is not covered
The statuary suspension system doesn’t affect the obligation to pay debts, nor does it affect the regulations of ordinary contractual exceptions (exceptio non adimpleti contractus, retention right, compensation, etc.).
- Application period
These protection measures will be applicable until May 17th 2020, but could of course be extended if necessary.