Since 1 April 2009, the Belgian Business Continuity Act (WCO/LCE) has replaced the Judicial Composition Act. It offers companies experiencing temporary financial difficulties the opportunity to continue their activities or to transfer them fully or partially, thereby maintaining jobs.

Specifically, a company with WCO/LCE status is temporarily protected against its creditors. This gives them breathing space to make it through the following months and to safeguard their continued existence.

The Belgian Business Act in practice

One of the main advantages of the WCO/LCE is its low threshold. A company can rely on the WCO/LCE if:

• its continued existence is under threat;
• a realistic recovery plan or a transfer scenario would safeguard all or part of the company's economic activity and jobs;
• it can continue to operate during the period of protection, provided it can repay its current debts.

If the company meets these criteria it has two options for a solution:

• Legal procedure
  The company must submit an application for legal restructuring with the commercial court.
• Out-of-court procedure
  The company tries to come to an amicable settlement with at least two creditors without court intervention.

Whether this will actually lead to a solution is difficult to predict. Each case is different – it all depends on the creditors and the feasibility of restructuring.

Amendment

A couple of years after the introduction of the law it was clear that it was not producing the desired outcome. There are various reasons for this:

• compared to the number of bankruptcies, the number of WCO/LCE applications remained limited;
• business continuity was only guaranteed in around 30% of cases. This figure is skewed, however, as some bankruptcies only concern non-profitable activities; the healthy business activities were rescued under the WCO/LCE. Often, the cause of failure is late application or an unrealistic recovery plan;
• this procedure sometimes lead to abuse, such as applying reduced prices for the sale of assets or unsavoury commercial practices during the period of protection;
• a significant snowball effect, where customers or suppliers of companies with WCO/LCE status ran into difficulties themselves.

For this reason the WCO/LCE was amended by act of 27 May 2013 which came into force on 1 August 2013. The amended act removes grey areas and better informs creditors, thus increasing the chance of success of legal restructuring.

The Belgian Business Act (WCO/LCE) covers a particularly wide spectrum. We will discuss the different options and their pros and cons in further detail.

The legal procedure

In this case the company starts a legal procedure so that the court can facilitate a smooth rescue and recovery process.

How does this work in practice?

The company must submit an application for legal restructuring with the commercial court. It must also provide a clear picture of its financial situation based on its balance sheet, annual accounts and accounting.

• If the court approves the application, the company is protected against its creditors for a maximum of 6 months (this can be extended to 18 months under certain conditions). Specifically, this means that:
• the company temporarily does not have to pay its current creditors, although it is free to decide to do so nevertheless – on condition that continuity demands this;
• its movable property or land and buildings cannot be attached;
• it is not possible to declare the company bankrupt, dissolve it or liquidate it.

• If the court rejects the application, the company has 8 days in which to lodge an appeal. It remains protected against its creditors until the decision on appeal.

Useful information: the protection against creditors is already effective at the time the court reviews the application.

Three portals

There are three types of legal restructuring, also known as 'portals':

Amicable settlement

The company can try to come to an amicable settlement with at least two creditors under the court's supervision.

Advantages

• The managing director or owner retains power of decision, as the court only fulfils a supervisory and monitoring role.
• The court can impose 'moderate payment terms' on the creditors if they show little flexibility, thus forcing them to grant the company deferred payment terms.

Disadvantages

• Whether a settlement can be reached depends on the goodwill of the creditors.
• The company only enjoys legal protection, not economic protection. By publishing its WCO/LCE status in the Belgian Official Gazette, the company risks reputation damage or a (permanent) breach of confidence with its customers and suppliers.
• The company must notify its employees of the procedure, which may lead to unrest.

Collective composition

A company that opts for this procedure will try to come to a composition with all its creditors under the court's supervision. This is done on the basis of a recovery plan and an arrangement for outstanding debts that can be partially cancelled.

Since the amendment of the WCO/LCE each creditor must, in principle, be paid at least 15% of their outstanding debt through the recovery plan.

Once a majority of creditors has voted in favour of the composition and the court has approved this, it becomes binding on all parties – and therefore also on any non-preferential creditors who did not vote on the recovery plan and debt rescheduling.

Advantages

• The managing director or owner retains the power of decision and control over the company.
• The company has five years in which to complete the recovery plan.
• Even if it concerns a collective composition, it is possible to come to individual arrangements with each creditor or group of creditors.
• Creditors who are difficult to convince may be obliged to respect the composition through a vote – on condition of course that there is a majority.

Disadvantages

• The result of this type of vote is sometimes difficult to predict, especially if not all creditors turn up.
• The company only enjoys legal protection, not economic protection. By publishing its WCO/LCE status in the Belgian Official Gazette, the company risks reputation damage or a (permanent) breach of confidence with its customers and suppliers.
• The company must notify its employees of the procedure, which may lead to unrest.

Transfer of activities

This option is intended to protect the company's viable activities and to apply for liquidation or bankruptcy for the remaining activities. This can be done optionally at the request of the company, but also mandatorily, for instance if the conditions for bankruptcy are met or if the creditors and/or the court do not approve the recovery plan.

Specifically the company will, under the court's supervision, try to reach a composition for full or partial transfer of its activities. Once a bidder has been found, the court will decide if the bid and the arrangement for creditors is fair and acceptable.
  
Advantage

• The company can rescue all or part of its activities without having to go bankrupt first.

Disadvantage

• A legal representative must supervise the transfer, which means that the managing director or owner no longer has (sole) power of decision.

How much does the legal procedure cost?

Because the WCO/LCE procedure has to remain as accessible as possible, the legal costs are limited. Since 2013, however, the applicant must pay a fee of EUR 1,000. There are also some other minor costs, such as publication in the Belgian Official Gazette. In some cases there are also administrative costs, e.g. sending registered letters.

There are, however, indirect costs as well in that the company has to spend a lot of commercial time on preparing and implementing the procedure, or has to call in external advisers. Restructuring can also require a substantial budget.

The out-of-court procedure

The company can try to come to an amicable settlement with at least two creditors without having to involve the court.

The parties involved decide mutually and freely how to make the company financially sound again. The composition is only binding on the creditors who have taken part in the negotiations.
 
Advantages

• The company itself chooses the creditors with which it wishes to negotiate.
• The composition is not published, only filed with the court registry. The risk of reputation damage is therefore much smaller than with a legal procedure.
• No court costs.
• No court intervention.
• This is attractive for creditors, as a legal procedure or failure entails the risk of having their claims frozen or remitted.

Disadvantage

• The negotiating creditors have full control of the process. The court cannot oblige them to grant a postponement of payment or waive part of their claims.

How much does the out-of-court procedure cost?

Obviously there are no court costs as no legal procedure will be started. However, the negotiations require a substantial time investment on the part of the company, and sometimes external advisers must be paid.

Depending on what is agreed on with the creditors, the restructuring phase can incur significant costs, especially if it concerns a thorough restructuring.

What impact and practical consequences does the WCO/LCE status of a customer or supplier have on your activities? 14 practical questions and answers.

The basics

1. How do I know if a company with which I do business has applied for WCO/LCE status?
2. I am a creditor in a WCO/LCE procedure. Should I engage a lawyer?
3. Do I have a say in the recovery plan of a company with WCO/LCE status?
4. How can my vote influence the recovery plan or debt settlement?
5. What will the bank do if a corporate customer applies for WCO/LCE status?
6. Are there alternatives to the WCO/LCE?
7. Where can I find further information and support?

You are a supplier and your customer applies for WCO/LCE status

8. Can I terminate a long-term contract with my customer if they apply for WCO/LCE status during the term of the contract?
9. Supplying to a customer with WCO/LCE status entails certain risks. Can I ask for payment in cash to hedge the risk?
10. Can I repossess goods not yet paid for but already delivered to my customer?
11. Does my credit insurance also cover claims on companies with WCO/LCE status?
12. Can I record receivables on a customer with WCO/LCE status as a tax deductible depreciation?

You are a customer and your supplier applies for WCO/LCE status

13. Should my supplier continue to supply to me, even if they have applied for WCO/LCE?
14. Is it advisable to continue to do business with this supplier during the WCO/LCE procedure?

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The bill to introduce this obligation in Belgium has been submitted to the Federal Parliament. If the draft bill is approved, B2B e-invoicing will become mandatory from 1 January 2026. Our experts explain why Belgium wants to introduce these new rules, what the implications are for your company and how we can better support you.

“The bill is consistent with international developments and initiatives at the European level,” says Nicolas De Vijlder, Head of Beyond Banking at BNP Paribas Fortis. "Europe's ambition is a harmonised digital standard. Structured e-invoicing between companies will also reduce the administrative burden of invoicing, enabling companies to work more efficiently and increase their competitiveness. The automation of VAT declarations will also help governments prevent tax fraud and adjust economic policies based on more qualitative data.”

Evolution rather than a revolution

“The new legislation is an evolution rather than a revolution,” adds Erik Breugelmans, Deputy Managing Director at BNP Paribas Factoring Northern Europe. "Digitalisation is becoming pervasive at all levels of society, as we have seen with the increase in electronic payments, as well as the additional obligations in recent years regarding electronic invoicing to the government. In this sense, the bill for mandatory electronic invoicing between companies is a logical next step. Our bank is happy to contribute to this process, although we do not intend to offer the same services as accounting software or fintechs. However, we are happy to help our customers with payments and financing."

The impact on businesses

“Customers need to be aware that the new regulations will have an impact on their internal and external processes,” continues Erik Breugelmans. "The majority of Belgian companies mainly serve an international market, which means that the introduction of electronic invoicing will be more complex for them than for companies operating in the domestic market. As the legislation will be introduced in one go, they need to start preparing now."

“The new rules will affect a company’s accounting department as well as its IT department,” emphasises Nicolas De Vijlder. "The procedural requirements are key, otherwise the automated process will not work. However, one of the main benefits of advanced automation is that everything can be done faster and more efficiently. The time between sending an invoice and paying it will be shorter and cash flows more predictable. In addition, it will also reduce the risk of error and fraud, as all transactions will pass through a secure channel."

Ready to offer you even more and better support

“Thanks to the far-reaching digitisation resulting from the new regulations, we will be able to further optimise payments,” concludes Erik Breugelmans. "As a bank, we need to finance our customers’ receivables as quickly and efficiently as possible, so that they have easier access to their working capital. In addition, because we have already gone through an entire process in terms of large-scale automation, we will be able to adapt quickly to the new rules. We can also draw on the expertise of the BNP Paribas Group, which is currently developing an e-invoicing solution for large companies."

Want to know more?

Listen to the episode on B2B e-invoicing :

• French version
• Dutch version 

The price of energy has experienced both high highs and low lows in recent years. This yo-yo behaviour is a worry to many entrepreneurs. Once again, BNP Paribas Fortis is here to offer you stability.

Controlling the price of energy: it’s an issue that’s almost impossible to avoid, or one that has been a recurring concern in your company over the past few years? We come from a time when energy prices were very volatile, with both high highs and low lows. These fluctuations have worried many entrepreneurs and, in some cases, caused huge additional costs. There is, however, a less well-known way for entrepreneurs to carry out risk management in this area. BNP Paribas Fortis is here to advise you.

Pendulum movement

Energy prices have been on a volatile ride in recent years. After the invasion of Ukraine, they rose to unprecedented levels. Gas prices rose to EUR 300 per MWh, while in previous years they had been around EUR 10-15 per MWh. Electricity prices rose to over EUR 600 per MWh. In previous years, the price was barely EUR 50 per MWh.

Crisis management

"As a result, BNP Paribas Fortis has received an increasing number of enquiries in recent years from companies looking to financially lock in their energy prices. Typically as a company you pay a variable price to the energy supplier. While you fix the price with the bank via a financial swap. Such financial swaps are also used to hedge other commodities (metals, oil products, etc.)." 

Mattias Demets, Commodity Derivatives Sales at BNP Paribas Fortis

The energy crisis of 2022 sent shock waves through the economy. Especially in energy-intensive sectors such as metallurgy or chemicals, it became clear how much affordable energy was crucial to the survival of many companies. Those that were self-sufficient in their energy needs weathered the storm better than others. The energy crisis also highlighted the importance of risk management. Companies wanted, as the legislator put it, to act like "prudent and reasonable persons" - the former "good householder principle". They fixed their energy prices and came out of the crisis virtually unscathed. While others could only hope that energy prices would come down again.

'Never waste a good crisis' is a regularly heard truism. For this energy crisis, we can use this expression once again. It’s fascinating to see companies now taking charge of their own energy supply. The rise of PPAs – Power Purchase Agreements – is particularly remarkable. A PPA is an electricity purchase agreement between a power producer and a customer.

Risk management

Companies are also making great strides in risk management. In the past, it was often up to management to lock in energy prices. They saw it as an additional responsibility to negotiate with energy suppliers. But since the energy crisis, we have seen companies become much more professional. Managing energy prices is today a job in itself. Companies are increasingly thinking about the right strategy to manage their energy costs so that their energy prices come down. How and when they lock in energy prices has become more of an informed decision than ever before, allowing them to protect their margins in the event of rising prices.

As a result, BNP Paribas Fortis has received an increasing number of enquiries in recent years from companies looking to financially lock in their energy prices. Typically as a company you pay a variable price to the energy supplier. While you fix the price with the bank via a financial swap. Such financial swaps are also used to hedge other commodities (metals, oil products, etc.). A financial swap may seem a bit complex at first, but it’s actually not such an intricate transaction. Of course, other structures are also available, depending on your needs.

This is where the “prudent and reasonable person” returns to assess what lies ahead. After all, whether you’re looking for smart investment opportunities or advice on ways to control your energy costs, it ultimately boils down to two sides of the same coin. BNP Paribas Fortis not only thinks about investing with you as an entrepreneur, but also about ways to help you smartly and safely manage important expenses  such as energy costs.

Permanent drop?

Regardless of how companies choose to fix their energy prices, the current market context is very interesting at the moment. Industry in Europe is going through tough times. Nevertheless, the economy is experiencing a soft landing – a slowdown, without a real recession. This is currently leading to lower gas and electricity prices. We have also had a mild and windy autumn and winter. As a result, energy producers have generated a historically high amount of electricity from renewable sources in recent months.

And there’s nothing to suggest that prices won't continue to fall. Europe is importing more LNG from the United States than ever before. Indeed, both the price of US gas and the cost of transporting it have fallen dramatically in recent months. However, elections are coming up in more than 65% of the developed world, and the geopolitical situation (Ukraine, Israel, Taiwan) could again cause volatility.

Prudence

Gas and electricity prices have not been this low for two years and the market is currently stable. But the 2022 energy crisis has shown that we must always be on our guard. Locking in your energy price is not only the most cost-effective tactic, but it will also protect you, as a business owner in times of increasing volatility.

For more information, please contact your relationship manager.