BELGIUM Law and Practice Contributed by: Wim Aerts, Dorothée Vermeiren and Stijn Van Walleghem, Clifford Chance
bankruptcy proceeding, but unsecured claims will only receive payment (if value is available to them) at the very end of the insolvency pro - ceeding. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency Judicial reorganisation proceedings exist and are open to debtors (and, in certain circumstances, creditors, interested third parties or the public prosecutor) if the continuity of the enterprise is at risk. Judicial reorganisation proceedings and proceedings for the transfer of business under judicial authority offer bankruptcy protection and provide (in the event of public proceedings) for a temporary stay of enforcement pending the proceedings. During the procedure, the debtor remains in possession and remains entitled to operate the business. The aim of these proce - dures is to have either (i) an amicable agreement with creditors, (ii) a reorganisation plan approved with a view to preserve the continuity of the business, or (iii) a court-supervised sale of the companies’ activities. While the track record of judicial reorganisation in preserving continuity is mixed, the procedure is commonly used. In 2023, changes were made to the procedure, allowing among others for a reorganisation to be private (ie, without automatic moratorium and publication). These and other procedural chang - es are contributing to the more common use of these proceedings, also in larger transactions. 7.5 Risk Areas for Lenders Insolvencies are usually value destructive and all costs of the bankruptcy will need to be paid out of the estate. Upon the opening of the insol - vency proceeding, a court-appointed liquidator will take over, which means there is loss of con - trol. Furthermore, a liquidator may investigate the causes of bankruptcy, which include prefer -
ential transactions and any form of director and or lender liability claims. Lender liability may be upheld if extending or maintaining credit is deemed to have aggravated the bankruptcy by creating the impression of a solvent debtor, but
is not often established in Belgium. 7.6 Transactions Voidable Upon Insolvency
Transactions entered into during the suspect period (which is a period determined by the court upon the declaration of bankruptcy and can last up to six months) may be voided if they involve the payment of debts prior to their due date, the entering into transactions without adequate consideration and/or the granting of security for pre-existing debts, as well as other transactions where the counterparty was aware of the actual insolvency of the debtor. 7.7 Set-Off Rights Contractual set-off is effective on insolvency. 7.8 Out-of-Court v In-Court Enforcement Out-of-court restructurings can take many forms, including those involving equity contri - butions by existing equity holders, creditors becoming equity holders and/or enforcement of share pledges that do not require court approval. Frequently, the preparation of a share pledge enforcement is an effective tool to come to a consensual transaction with the existing equity holders. 7.9 Dissenting Lenders and Non- Consensual Restructurings A debtor can initiate judicial reorganisation pro - ceedings through the adoption of a so-called collective plan which includes a cram-down procedure that can involve write-off of debt, extension of maturity dates, debt-for-equity swaps and similar arrangements. For smaller
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