23 Apr The judicial reorganization procedure (“PRJ”): the novelties of the law of 21 March 2021
Since 26 March 2021, Book XX of the Code of Economic Law has undergone changes, some of which are related to the current health crisis. The purpose is indeed presented as “way to tailor the judicial reorganization procedures to the requirements of the economic crisis caused by the COVID-19 pandemic, namely by facilitating, among other things, the companies’ access to these procedures, (notably SMEs).
The law is composed of three main parts, which are designed to:
1. Facilitate access to the judicial reorganization procedure by removing, with greater control from the competent court, the sanction of inadmissibility of a PRJ application on grounds of missing legally required appendices.
2. Introduce in Belgian law a prepackaged bankruptcy agreement, named Preparatory Agreement, being a legal framework for negotiating a reorganization plan without the risk of the related bad press, thus reducing the standstill period to a minimum.
This preparatory phase is not subject to any publicity and aims at paving the way for a PRJ either by amicable or by collective agreement. The judicial representative appointed on this occasion has been allotted relatively extended powers and can, for instance, petition the President of the Court of enterprise for a temporary deferral of the debtor’s payment obligations or for granting him a payment plan, that may be forced onto the creditor, despite his enforceable title.
If the Preparatory Agreement is successful, it leads to an accelerated opening of the PRJ which is then published for the first time in the Belgian Official Journal.
3. To guarantee a tax exemption for all agreements approved under the provisions of Book XX. The purpose is to ensure an equal tax treatment for all the creditors faced with a capital loss resulting from agreements reached pursuant to Book XX.
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The particularity of this law is that the majority of its provisions will cease to apply on June 30, 2021. This date may however be extended, if required, by Royal Decree. The idea is to trigger a more thorough reform of the insolvency procedure in the short term as part of the transposition of the European Directive on restructuring and insolvency, which is to be implemented by June 2021.
For more information on that subject, feel free to contact Me Virginie SCHOONHEYT (firstname.lastname@example.org).
The Cairn Legal team.