BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Melissa Verplancke and Gauthier Callens, Linklaters
with a view to the acquisition or subscription of their own shares by a third party (unless certain conditions are met) and transactions entered into by a Belgian grantor must fall within its cor - porate purpose and serve its corporate benefit. 3.6 Formalities When a Borrower Is in Default In the event of a debtor’s default, a lender can enforce its (validly established) mortgage. Enforcement of mortgages may only take place by sale of mortgaged assets at public auction or direct sale of pledged assets pursuant to proce - dures decided by the court. Lenders with valid security interests over the real estate asset will have priority, depending on their ranking, over unsecured lenders regarding the proceeds of the sale. The timing for the enforcement of a mortgage varies, depending on the duration of court pro - ceedings required for the verification of the claim and the formalities related to selling the asset but may easily take up to one year from the claim before the courts. Generally, the execution of the notarial deed of sale takes several months. Enforcement of a security interest is not depend - ent on the debtor’s insolvency. Bankruptcy proceedings can delay the enforce - ment of security. Although the lenders in princi - ple retain the right, in the case of bankruptcy of the debtor, to initiate or continue proceedings, any enforcement procedure is automatically sus - pended for a maximum period of 60 days while creditors’ claims are checked. Enforcement pro - cedures by the lenders may be suspended by the court, at the request of the receiver, for a period of up to one year from the declaration of insolvency to allow the receiver to proceed with the sale by court order.
In judicial reorganisation proceedings (a corpo - rate rescue procedure), all enforcement meas - ures will be suspended during the moratorium declared by the court (for a period of up to four months, which may be extended, under certain circumstances, up to a maximum of 12 months). 3.7 Subordinating Existing Debt to Newly Created Debt A creditor can agree to contractually subordi - nate existing secured debt to newly created debt through a subordination or intercreditor agree - ment. Furthermore, should the debtor enter into insol- vency proceedings, the pre-existing secured debt may become subordinate to claims of cer - tain privileged creditors (in particular bankruptcy proceeding debts (debt of the estate) – eg, the As a principle, lenders do not bear liability for environmental damages or infringements of environmental legislation incurred by the bor - rower (see 2.7 Soil Pollution or Environmental Contamination ). 3.9 Effects of a Borrower Becoming Insolvent In principle, a validly granted and perfected security interest cannot be declared void in the event of the insolvency of the borrower. However, new security granted in respect of pre- existing debt may be declared ineffective against third parties if concluded or performed during a so-called “hardening period” before a bank - ruptcy judgment. costs of managing the estate). 3.8 Lenders’ Liability Under Environmental Laws
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