Today, 24 April 2020, Royal Decree Number 15 concerning the temporary suspension, for the benefit of enterprises, of enforcement measures and other measures during the COVID-19 crisis (hereinafter the "RD") was published in the Belgian Official Gazette. The Belgian Government thereby grants a general suspension to enterprises affected by the COVID‑19 crisis, which essentially means they will be temporarily protected from bankruptcy, attachment and dissolution of agreements due to non-payment. However, this scheme does not affect the obligation to pay debts which are due.
In accordance with the suspension that may be granted by the court in the context of a judicial reorganisation procedure, a temporary suspension will be granted to all enterprises covered by the RD. This suspension will protect them from conservatory or enforcement attachments, bankruptcy (and judicial dissolution), as well as from the dissolution of agreements due to non-payment.
Below we address the scope of application of the RD (1), the extent of the general suspension (2), the possible exceptions (3), the suspension of the obligation to file for bankruptcy (4), the protection of new credit (5) and the duration of the suspension (6).
1. Scope
The suspension granted by the RD applies to all enterprises which fall within the scope of Book XX of the Economic Law Code ("ELC") and whose continuity is threatened by the COVID-19 epidemic or pandemic and its consequences. Enterprises that were already in default on 18 March 2020 are excluded.
2. The suspension
Protection against attachments and means of enforcement
The suspension means that no conservatory or enforcement attachment can be levied, and that no means of execution can be used or continued on the goods of the enterprise. This applies with respect to all the debts of the enterprise. The date of creation of the debt or whether the debt is due are not important. The RD provides for an exception for conservatory or enforcement attachments on immovable property and seagoing vessels as well as inland vessels. Therefore, such attachments remain possible.
Protection from forced bankruptcy, forced transfer under judicial supervision and judicial dissolution
During the suspension, an enterprise may not be declared bankrupt on summons or, if it is a legal entity, it may not be dissolved by the courts. As an exception to this, a bankruptcy or judicial dissolution at the initiative of the Public Prosecutor or the provisional administrator appointed in application of article XX.32 ELC will remain possible. If the summoned enterprise accepts the declaration of bankruptcy or judicial dissolution, the bankruptcy or dissolution may be pronounced.
In addition, the forced transfer under judicial supervision of all or part of the enterprise's activities pursuant to article XX.84, §2, 1° ELC is also not possible during the suspension.
Protection of enterprises with a court-approved reorganisation plan
Payment terms included in a reorganisation plan approved by a court (before or after the entry into force of the RD) will be extended by the duration of the suspension granted by the RD. Where appropriate, this extension may lead to the (normally applicable) maximum term of five years being exceeded for the implementation of a reorganisation plan and the (normally applicable) maximum standstill period that can be provided in the reorganisation plan for extraordinary creditors.
Protection of existing agreements
For agreements concluded prior to the entry into force of the RD, the possibility of unilateral or judicial dissolution due to the non-payment of a payable monetary debt during the suspension will be excluded. This rule does not apply to employment contracts.
In order to avoid misunderstandings, the RD emphasises that this rule does not affect the obligation to pay debts which are due and that the (other) common contractual sanctions, such as the exception of non-performance, the off-setting of debt and the retention right, remain unaffected. The latter also applies in relation to the Financial Security Act.
3. Possibility for the President of the Enterprise Court to grant exceptions
To avoid misuse, the RD provides the possibility for the President of the Enterprise Court to decide that an enterprise does not fall within the scope ratione personae of the suspension granted by the RD or to (wholly or partially) lift the suspension. The procedure can be initiated by a writ of summons. The RD determines that in making his decision, in addition to the applicant's interests, the President, sitting as in summary proceedings, should also consider whether, as a result of the COVID-19 epidemic or pandemic, the enterprise's turnover or activity has decreased significantly, whether economic unemployment was wholly or partially applied for, and whether the government has ordered the closure of the enterprise.
4. Suspension of the obligation to file for bankruptcy
If the fulfilment of the bankruptcy conditions is due to the COVID-19 epidemic or pandemic and its consequences, the obligation to file for bankruptcy will be suspended for the duration of the suspension granted by the RD. Naturally, this does not prevent the enterprise from deciding to file for bankruptcy.
5. Protection of new credit
New credit (including suppliers' credit) provided during the suspension period granted by the RD to the enterprises protected by the RD and the securities or acts that are established in execution of such new credit will be protected against subsequent bankruptcy. More specifically, article XX.112 ELC, pursuant to which certain actions performed during the period in question may be declared non-enforceable in case of bankruptcy, will not apply here.
Furthermore, it is also determined that a lender of new credit cannot be held liable solely because the new credit did not actually enable the continuity of all or part of the debtor's assets or activities.
6. Entry into force
The RD enters into force on 24 April 2020 and the suspension granted by the RD will expire on 17 May 2020. This term can be extended.
The suspension granted by Royal Decree no. 15 to enterprises affected by the COVID‑19 crisis was extended until 17 June 2020 by a royal decree dated 13 May 2020.
