Belgium extends bankruptcy moratorium for indebted companies

Belgium extends bankruptcy moratorium for indebted companies
© Belga

The tax authorities and National Social Security Office, ONSS, have agreed, for the moment, not to declare businesses that are too heavily indebted bankrupt, Justice Minister Vincent Van Quickenborne told the Chamber’s Economic Affairs Commission this week.

A moratorium on bankruptcies ended on Monday and Parliament is yet to approve a new bill on the judicial reorganisation procedure. Amendments to a text prepared by the Government were submitted only on Friday.

Some parliamentarians asked for the moratorium to be extended at least until a new law that eases the judicial reorganisation of businesses and makes it cheaper to do. However, the Government felt that too long a moratorium could endanger business that are in good shape and have debt claims to pursue, and keep afloat dying businesses that then go on to pile up debts.

“Today’s creditors risk becoming tomorrow’s debtors,” the minister warned on Wednesday.

Responding to parliamentarians’ queries, he however, gave the assurance that the Finance Department and the ONSS, which receive social contributions, would not move to have businesses that default on payments declared bankrupt.

Not everyone in the Chamber was satisfied.

"I’m appalled by the turn the debate has taken,” said Maxime Prevot (CdH). “We’ve known that the moratorium was ending for weeks now.”

Prevot insisted that there was a difference between the situation at the end of the first moratorium, in June, after the first wave of the pandemic, and the second moratorium.

"At the end of the first moratorium, businesses still had reserves,” she recalled, “But here, in February, these reserves have dried up and we no longer face a problem of profitability but one of solvency. Many businesses today face an existential question: whether to continue their activity or not.”

For the labour party, PTB, the position of the Belgian business federation, FEB, which is calling for an end to the moratorium, is being given precedence over that of the Union of Middle Classes, UCM, which represents small companies and self-employed businesses, and wants the moratorium extended. “There could be a wave of bankruptcies,” UCM’s Marco Van Hees warned.

The Commission has decided to work fast. The Council of State will be contacted urgently on the amendments, and a plenary vote could be held on 4 March.

The Brussels Times

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