Bankruptcy proceedings in Belgium: steps and consequences

When is a business legally bankrupt?

Insolvency alone does not trigger it. Book XX of the Code of Economic Law sets two cumulative conditions:

• A persistent cessation of payments: the business durably fails to pay debts that are due.
• Shaken creditworthiness: banks and suppliers no longer trust it.

A late payment is therefore not enough. Conversely, a viable business can first apply for judicial reorganisation.

Any enterprise under the Code can go bankrupt: a company, a sole trader or a non-profit association. The FPS Economy also provides information for entrepreneurs in difficulty. This guide walks through bankruptcy proceedings step by step.

Who starts bankruptcy proceedings?

Three parties can bring the matter to court.

The debtor's own filing

The manager must lodge a voluntary petition within one month of the cessation of payments. The filing normally goes through the central solvency register, RegSol. A late filing can expose the manager to liability.

A creditor's summons

An unpaid creditor can summon the business before the enterprise court. The creditor must then prove both conditions.

The public prosecutor

The public prosecutor can also act, often after a warning from the chamber for businesses in difficulty.

The judgment opening bankruptcy proceedings

The enterprise court declares the business bankrupt by judgment. It appoints:

• One or more trustees, usually lawyers, who run the estate.
• A supervisory judge, who oversees progress.

The judgment also sets the deadline for creditors to file their claims. Publication in the Belgian Official Gazette informs third parties.

Effects of bankruptcy proceedings on the business

From the judgment, the bankrupt debtor loses control of its assets. Lawyers call this divestment.

• The trustee takes over the assets and bank accounts.
• Individual enforcement by creditors stops.
• The trustee decides whether ongoing contracts continue.
• The trustee can terminate employment contracts.

Dismissed employees can then turn to the Company Closure Fund, within certain limits.

The trustee's role in bankruptcy proceedings

The trustee works on three fronts at once.

Realising the assets

The trustee sells assets privately or at auction, with the supervisory judge's approval. Where possible, the trustee tries to transfer the activity as a going concern. The trustee also collects unpaid customer invoices.

Verifying claims

Each creditor files a claim, normally through RegSol. The trustee examines it, then admits or disputes it. The court decides in case of disagreement.

Distributing the proceeds

The trustee then distributes the money in a legal order. In simplified terms:

Ordinary creditors often recover little or nothing.

Closing the case

Bankruptcy proceedings end after the liquidation of the assets, or earlier if the assets cannot cover the costs. For a company, closure leads to its dissolution. The company then disappears for good.

Debt discharge for individuals

At the end of bankruptcy proceedings, Book XX allows an individual debtor to request discharge of the remaining debts. The request must follow legal deadlines, ideally at the time of filing. The court can refuse discharge, for instance after a manifestly serious fault. Some debts still survive discharge, such as maintenance payments.

Consequences for the manager

Bankruptcy proceedings do not automatically make the manager liable. The trustee can nevertheless act in several cases.

• A manifestly serious fault that contributed to the collapse.
• Continuing a loss-making activity with no reasonable prospect of recovery.
• A late filing or incomplete accounts, which often worsen the case.

The court can also impose a professional ban. For details, read our guide on director liability.

Mistakes to avoid before bankruptcy proceedings

These are the traps we see most often.

• Paying a close creditor first, to the detriment of others. The trustee can challenge such payments if they fall within the suspect period.
• Stripping the company of its assets just before filing.
• Waiting months after the cessation of payments.
• Continuing to order from suppliers without the means to pay.
• Destroying or neglecting the accounts.

Anticipate rather than endure

Bankruptcy proceedings rarely come out of nowhere. An up-to-date financial forecast reveals a cash crisis months in advance. With Juristelo, you track cash and test recovery scenarios. You thus keep the choice between reorganisation, voluntary liquidation or a timely filing.