Belgium must adjust its bankruptcy law if it wishes to avert a tsunami of business failures that could see tens of thousands of firms go bust after the summer.
Financial services company Graydon said that a major business crisis was looming and could hit Belgium just as the coronavirus crisis begins to recede.
Graydon estimates that as many as 50,000 businesses in Belgium could file for bankruptcy after the summer months, HLN reports.
By contrast, just under 12,000 bankruptcies were recorded last year — the second-highest number ever recorded in Belgium, only behind 2013, when 12,306 companies went broke.
The coronavirus-imposed freeze on liquidations could further accelerate the financial fallout, unleashing a deluge of business failings which Graydon said could be too much for trade courts to handle.
Graydon also warned that a 2018 amendment to bankruptcy laws meant to give failing entrepreneurs a second chance could prompt a gush of business owners to go out of business in an effort to reemerge from the coronavirus crisis.
“Legislation was amended in May 2018 to include the basic idea of ‘a second chance — that is an easy solution,” Graydon’s Eric Van den Broele told HLN, nevertheless warning that it could create a domino effect, dragging in other companies or suppliers into the going-out-of-business vortex.
The financial services firm said that Belgian authorities should once again tweak business regulation in response to the coronavirus crisis, in a way which could allow judges to point entrepreneurs to bankruptcy alternatives in order to avoid giving fuel to the “bankruptcy boom” which began last year.
The Brussels Times