Pre-package procedure
This new procedure precedes the JRP and allows the debtor to establish a draft amicable or collective agreement which can, if successful, be finalized in an expedited JRP. Main advantage is that this preliminary phase takes place without any publicity avoiding its negative effects.
The latter is one of the main goals of the Law. Other goals are:
- to simplify and speed up the JRP;
- to shorten the suspension period;
- to coincide the publication of the opening of the JRP with a previously negotiated amicable or collective agreement;
- to reduce financial uncertainty for the stakeholders of the debtor.
The debtor can request the court of enterprises for such preliminary procedure and the appointment of a judicial representative. After the appointment, the judicial representative will try to establish an amicable agreement with one or more creditors, or a reorganization plan with all the creditors.
Pendant of the non-publication of this preliminary phase, is that the debtor is not protected yet against its creditors. As an alternative, the judicial representative may request the president of the court for payment extensions or other measures that cannot exceed 4 months. This request needs to be adjusted to the needs of the debtor. The situation of the debtor, the ongoing negotiations, the damage that the requested measures may incur to the creditors and the general interest, are factors that need to be taken into account when granting one or more of the requested measures. Such measure can nevertheless be revoked at any time on request of the judicial representative, a creditor or on initiative of the judge.
When a pre-package-agreement is established by the judicial representative, the president of the court will forward the case to the insolvency court which will open a – expedient – JRP. In case the pre-package-agreement takes the form of an amicable agreement, a hearing date will be set within one month of the referral of the case and the opening of the JRP. The insolvency court will then homologate the amicable agreement. In case the pre-package-agreement constitutes a collective agreement, a hearing date will be set on which the creditors can vote on the reorganization plan. This hearing needs to take place within three months of the referral of the case and the opening of the JRP.
From the moment of referral of the case, the debtor enjoys the normal protection offered by a normal JRP.
Easier access
Prior to the Law, the request for a JRP itself needed to be accompanied by multiple documents. If one of such annexes was not included with the request, the request would be inadmissible. The Law now softens this rigorous rule. It now only requires that a balance, profit and loss account, budget(plan) and the list of creditors are to be added at least two days before the hearing that will evaluate the request. If the debtor is not in the possibility to provide one of aforementioned documents, he can even suffice with adding a note explaining why these documents could not be provided within two days before the hearing.
Furthermore, if a debtor has been subject of a JRP over the last three years, this fact does no longer withhold him from requesting a new JRP. A debtor can thus request for successive JRP’s. Such successive JRP’s can however not affect the rights that creditors have acquired during a previous JRP.
Temporary character
Most of the measures introduced by the Law entered into force on 26 March 2021 and will end on 30 June 2021. The legislator has however foreseen the possibility to extend this term by royal decree.
The introduction of the electronic vote and the related provisions will enter into force on 1 January 2023.
If you wish more information on the highlighted measures or on any of the other measures, do not hesitate to contact us.
Kevin Van Deuren