The restructuring expert: The new kid on the block

The Belgian Act of June 7, 2023, transposing the EU Restructuring Directive (2019/1023) into Belgian law, finally entered into force on September 1, 2023. This major reform of Belgium’s preventative restructuring framework created opportunities for debtors, creditors, investors, insolvency practitioners through more flexible insolvency rules and advanced procedures tailored to the needs of today’s restructuring market. The new insolvency legislation will apply to insolvency proceedings opened as of September 1, 2023.

DLA Piper's Belgian restructuring team discussed the most important changes of the new Book XX on Insolvency of the Code Economic Law (‘CEL’) in a series of updates (available here: Belgium’s Insolvency Law Reform – Update Series)

Whereas there has already been much talked and written about the new rules regarding voting in so-called “classes” on restructuring plans of large companies (art. XX.83/1 et. seq CEL)^[1], as well as on the expected revival of the business transfer under judicial authority (new art. XX.84 et seq. CEL) prompted by the ‘Plessers’ case law of the CJEU^[2], another, less highlighted, but no less important innovation is the arrival of a new, potentially very important, actor in Belgium’s restructuring landscape.

From September 1, 2023, the restructuring expert will make its first appearance in Belgian restructuring proceedings. This court-appointed practitioner can be assigned a variety of tasks, ranging from assisting the debtor in negotiations with creditors to supervising the restructuring process and compliance with creditor information obligations.

As a reminder, in Belgian reorganisation proceedings the debtor traditionally retains control of the business during the reorganisation (debtor-in-possession)save in exceptional cases of misconduct, when a provisional administrator can be appointed by the court. As soon as a reorganisation procedure is filed for, a delegated judge (‘gedelegeerd rechter’) will automatically be appointed by the court. However, this court officer does not interfere with the debtor’s business or the reorganisation itself, but rather plays a supervisory role and reports to the court.

Whereas under the old regime it was possible for a debtor to request a corporate mediator (old art. XX.36 CEL), this court officer had no decision-making powers and was therefore strictly depended on the good will of the debtor and its creditors (which is why such appointments were rarely requested in practice).

What (or better, who)’s new?

Like the court officers under the old regime, the new restructuring expert is appointed by the court, but besides the debtor also creditors may request the appointment of this practitioner. This is quite a significant innovation and (indirectly) allows creditors to have a say in the actual restructuring.

The restructuring expert’s role and tasks (as stipulated in the court appointment order) can vary greatly and may include:

• mediation in negotiations on the reorganisation plan;
• drawing up a restructuring plan and advising on the composition of "classes" of creditors;^[3] 
• valuation of creditors' rights under a plan and in the event of bankruptcy or liquidation;
• supervising the reorganisation process conducted by the debtor in the interests of creditors (eg compliance with information obligations to creditors);
• requesting on behalf of the debtor an ad hoc moratorium against specific creditors in the context of closed reorganisation proceedings^[4];

Given this variety of potential tasks, the legislator considered it desirable to allow the courts to freely choose an expert suitable for the specific assignment, rather than limiting the court’s choice to a predetermined list (Parl. St. Kamer, 2022-23, doc 55 3231/001, p. 21). The law only requires that they (1) are elected based on their qualities and the necessities of each specific case; (2) they must offer guarantees of competence, experience, independence and impartiality; and (3) they may, but do not necessarily have to be a member of a public institution or a professional organization providing assistance in the reorganization of enterprises and be remunerated by such an organization (art. XX.20/1 CEL).

The debtor, but also creditors, may propose someone in particular in their petition for such appointment. Examples mentioned in the parliamentary works include: senior government officials, lawyers, business executives, accountants and auditors (non-exhaustive).

Though the parliamentary works to this new act reiterate the debtor-in-possession principle, this new actor (especially when compared to the court officers under the old regime) has undeniably been given significant powers in terms of steering the process and influencing the reorganisation plan. It’s particularly interesting that also creditors can ask the court to appoint this practitioner. Considering its initiative right to draw up and submit a reorganisation plan, which the debtor (having the final say on the plan) may not unreasonably refuse, this new actor and by extension, the creditors who have proposed them to the court, could have a major influence on the process and the content of a restructuring plan and in doing so exert pressure on the debtor to duly take the creditors’ interest into account throughout the restructuring process.

Key takeaways:

• New restructuring expert enters into Belgium’s restructuring framework
• Extensive range of roles/tasks (despite ‘debtor-in-possession’ principle)
• Initiative right for creditors to request the appointment and propose an expert
• Ability to draft and submit a restructuring plan (which the debtor cannot unreasonably refuse)

How can we help?

Our Belgian Restructuring Team (Legal 500, Tier 1 Insolvency) has significant experience in restructuring and consists of certified insolvency practitioners that are regularly appointed by the Belgian courts as provisional administrators, liquidators, bankruptcy receivers, corporate mediators and soon as restructuring experts.

• Private Reorganisation Proceedings: Avoiding negative Publicity
• The Judicial Transfer of Activities: Rising from the Ashes?
• Collective Plan Reorganisations: The New Voting System for Large Companies
• The Private Bankruptcy Preparation: Pre-Packing to preserve Enterprise Value

^[1] See DLA Piper’s Collective Plan Reorganisations: The New Voting System for Large Companies | DLA Piper

^[2] CJUE 16 May 2019, ‘Plessers’, C-509/17. See DLA Piper’s The Judicial Transfer of Activities: Rising from the Ashes? | DLA Piper

^[3]  See DLA Piper’s Collective plan reorganisations: The new voting system for large companies

^[4] See DLA Piper’s Private reorganisation proceedings: Avoiding negative publicity