Extension of Flexible Insolvency Rules

In response to COVID-19, the legislature, by the Act of March 21, 2021, amending Book XX of the Code of Economic Law and the Income Tax Code of 1992, has relaxed the formalities for initiating judicial reorganization proceedings. Previously, the legally required documents had to be attached to a petition to initiate judicial reorganization proceedings, under penalty of nullity. The legislature now allows the debtor company filing the petition to submit the documents no later than 2 days before the hearing. The legislature also provides for a “pre-packaged bankruptcy procedure,” which allows the debtor to enter into a preliminary agreement with one or more creditors. In addition, the law extends the duration of the commercial investigation from 4 to 8 months and from 8 to 18 months when the investigation is conducted by the Chamber for Companies in Difficulty itself. The relevant provisions (Articles 2, 4 through 12) of the Act of March 21, 2021, are extended until March 31, 2023. If your company is in dire straits and needs breathing room, do not hesitate to contact Crauwels Advocaten, who can work with you to find a solution.