Liquidation and bankruptcy

Bankruptcy is a procedure applied to a company (natural or legal person) that is no longer able to meet its financial obligations. Its main effect is the liquidation (in other words, the sale) of the company's assets.

WHAT ARE THE CONDITIONS?

  • A person (natural person = individual) or legal entity (= company) will be declared bankrupt if, at the time of bankruptcy, the following cumulative conditions are met:
  • it is a ‘business’;
  • it has ‘persistently stopped making payments’ and that its ‘credit has been affected’.

If the above conditions are met, the company must file an admission of bankruptcy with the clerk of the relevant company court within one month of the persistent cessation of payments. To do this, the admission of bankruptcy and its annexes are filed on the RegSol platform.

BANKRUPTCY PROCEDURE

A. DECLARATION OF BANKRUPTCY

  • To initiate the procedure, (i) the conditions must be met and (ii) the bankruptcy must be declared to the commercial tribunal.
  • Bankruptcy can be declared to the commercial tribunal in a number of ways:
    • Declaration by the bankrupt himself (‘bankruptcy on admission’)
    • Citation by one or more creditors
    • Summons from the public prosecutor (procureur du Roi) or an interested third party

B. HOW DOES THE PROCEDURE WORK?

  • After the declaration of bankruptcy and provided that the conditions for bankruptcy are met, the company's court declares the company bankrupt.
  • From that moment on, there is a divestiture in favour of the trustee appointed by the court, who is now the only person authorised to represent the bankrupt company. The trustee is generally considered to be a court-appointed agent who acts as the representative of the creditors and the bankrupt company.