BELGIUM Law and Practice Contributed by: Wim Aerts, Dorothée Vermeiren and Stijn Van Walleghem, Clifford Chance
5.7 Rules Governing the Priority of Competing Security Interests and/or Claims Belgian law recognises multiple security rights over the same assets, with ranking in most cases being determined by law on the basis of the date of first grant and/or registration. It is possible for creditors to cede their rank in favour of other creditors. It is possible to contractually agree the allocation of the proceeds of the enforcement of security among creditors, although this may only bind the parties. It is generally considered that questions regarding ranking of security and/or conflicting claims are complex in Belgium. Sub - ordination provisions are commonly used in Bel - gium, with the survival of insolvency often being protected through a pledge. 5.8 Priming Liens and/or Claims The most important liens that may rank ahead of the secured lenders are the various forms of estate debts and expenses. Please refer to 7.2 Waterfall of Payments . 5.9 Cash Pooling and Hedging/Cash Management Obligations Cash Pooling Cash pooling is common in Belgium and typi - cally documented by way of ancillary facility or separately. The cash pooling provider will require first ranking security over certain bank accounts and/or receivables and such first ranking secu - rity is typically permitted under the facilities agreement. Hedging It is typically possible in Belgian transactions for a borrower to enter into secured hedging, which would either rank super senior (up to a limit) or senior (subject only to being permitted hedging and the relevant hedging agreement complying
with the terms of the applicable intercreditor agreement). 5.10 Bank Licensing Licensing or Regulatory Limitations With respect to licensing and/or regulatory limi - tations or holding of collateral, please refer to 2. Regulatory Environment and 4. Tax Considera- tions . There are no specific limitations. Shared Security Belgian law does not know the construct of a trust. Security is typically granted to a represent - ative (ie, the Security Agent) acting on the basis of a representation organised by law. No such representation exists (yet) for a mortgage which will typically secure a parallel debt which is cre - ated contractually. Both regimes will allow the security agent to enforce the security and dis - tribute the proceeds of enforcement in accord - ance with an intercreditor agreement. If a lender transfers its claim on a borrower, this does not impact the representation or the paral - lel debt and, subject to novation, the security does not need to be retaken. Upon novation, security generally lapses save to the extent con - tractually preserved, which is what most agree - ments will provide. 6. Enforcement 6.1 Enforcement of Collateral by Non- Bank Secured Lenders Enforcement of loans and guarantees can take place by sending a demand for payment, taking into account any applicable contractual agree - ments. Most types of security interests in Bel - gium can be enforced without prior authorisation of the courts.
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