Proposed law: an alternative to bankruptcy

The Plessers judgment (C-509/17, ECLI:EU:C:2019:424) of the Court of Justice of the European Union gives preference to legislator in the domain of regulations related to insolvency of companies. Adapting the current legal rules is also advisable in light of the wave of corporate bankruptcies that can be expected in the wake of the coronavirus crisis.

Bankruptcies declared due to insufficient assets account for the lion's share of bankruptcies and generally involve proceedings without any benefit to the creditors. At the same time, bankruptcy is a complex procedure which considerably, and often ultimately needlessly, increases the workload of the commercial courts and the prosecutors. It requires the intervention of many judicial actors, including bankruptcy trustees, the commissioner-magistrate and many court clerks.

The current proposal gives the judge the possibility of choosing between the most appropriate discontinuity procedure: he will now be given the opportunity to apply the judicial dissolution procedure instead of applying the classic bankruptcy procedure. For example, it is advisable to apply the judicial dissolution to the so-called "empty box" companies - ones that have not been active for some time, that have no assets or employees (or even never did) and that can be removed from the economic landscape at minimal cost.

When filing for the bankruptcy of its debtor, the creditor will be given the possibility to submit a "dual" writ of summons: a summons to declare bankruptcy and, alternatively, to apply judicial dissolution. When the court identifies an “empty box”, it will (possibly ex officio) opt for judicial dissolution, followed by immediate closure in the absence of sufficient demonstrable perspective on assets. As such, it is not intended to prevent the courts from determining the suspension of payments, but rather to give the option to the courts to opt for the liquidation procedure that is most suitable socially and economically.

You can find the official proposal here (in French and Dutch). :

Our lawyers will be following this law and any related new legislation closely.