Insolvency: Flattening the Insolvency Curve: The Belgian Statutory Moratorium bis
The COVID-19 pandemic is having a significant impact on the world economy, as businesses worldwide face liquidity problems and related insolvency risks. Given the exceptional nature of this crisis, it is generally accepted that companies need to be supported in order to weather this crisis. The Special Decree Nr. 15 of 24 April 2020 (concerning the temporary suspension of enforcement measures in favour of businesses) temporarily protected Belgian companies against, inter alia, bankruptcy petitions and (certain) enforcement measures. Companies that were fundamentally healthy, but still affected by the COVID-19 measures, were protected this way. The first Moratorium was in line with initiatives taken by other EU Member States and ran from 24 April 2020 until 17 May 2020.
The Belgian legislator recently decided, as a reaction to the "second wave" of COVID-19, to reactivate the Moratorium. After all, the exceptional situation, which justifies such a far-reaching measure, is still an issue. The new Moratorium, which is outlined below, will be applicable from the 24 December 2020 until 31 January 2021.
The Government works simultaneously on measures to optimize insolvency law in view of the expected wave of bankruptcies in 2021.
The key features of the new Moratorium are summarized in the table below.
Stan Brijs and Sophie Jacmain, partners in our Restructuring & Insolvency department, comment as follows on the Moratorium: "The initial Moratorium was a uniform and temporary measure, which was simple and easy to implement. This measure, applied in conjunction with other financial measures, proved to be particularly effective. In this exceptional crisis year, bankruptcy figures are historically low.
The second Moratorium is justified for those companies affected by the mandatory shutdown measures. These companies are indeed deprived of the possibility of generating any turnover, in order to prevent the further spread of the virus. However, one must prevent those companies, which are fundamentally healthy, to go down because of a bankruptcy virus. The protection of the new Moratorium provides room for such companies to seek a more sustainable solution in consultation with all stakeholders.