BUSINESSES IN DIFFICULTIES
The company loses its legal personality and ceases to exist.
The company can be dissolved in three different ways:
By a resolution of the general meeting (voluntary dissolution);
By operation of law, as a result of a legally defined fact;
By a judicial decision
1. 1 The voluntary dissolution
This form of dissolution is always possible for:
A private limited company
A Cooperative Society
A Public Limited Company
A European company
A European cooperative society
The above-mentioned company forms can be dissolved at any time by a valid resolution of the general meeting.
The director will have to explain his dissolution proposal in a report that must be included on the agenda of the general meeting that will decide on the dissolution. This report includes a recent (not older than 3 months) statement of assets and liabilities.
This is audited by an appointed statutory auditor or designated auditor / external auditor. He informs the general meeting about the correctness. The partners receive a copy of both reports and of the statement of assets and liabilities.
The above reports are crucial. After all, the decision of the general meeting is invalid if they were missing.
Both the conclusions of the reports and the dissolution decision are taken by a notary.
The legislator has made some fundamental changes to the liquidation procedure in the context of the company law reform (WVV). The main strands of the reform are:
Simplification of the non-deficit liquidation
The intervention of the court for the confirmation of the appointment of the liquidator and the approval of the distribution plan is only required for deficit liquidations. The intervention of the court thus depends on the capital status of the company during the liquidation procedure.
Confirmation of liquidator appointment
The appointment of the liquidator will only have to be homologated if the statement of assets and liabilities shows that not all creditors can be paid in full. Therefore, if the value of equity is less than that of debt based on the statement of assets and liabilities, a judicial review will be necessary. This makes the role of the external auditor, auditor, auditor even more important.
However, any interested third party can always turn to the court to replace the liquidator for legal reasons. This offers the judge a great deal of discretion. This could include non-compliance with the appointment formalities, cases where the liquidation presented itself as non-deficient, but which eventually turns out to be the case.
Distribution plan approval
Even when drawing up the distribution plan, the judge will only have to intervene if it appears that not all creditors can be paid in full (deficit liquidation). Whether or not there is a deficit settlement will be determined in this phase on the basis of the actual settlement result.
The appointment of the liquidator and the approval of the distribution plan must be interpreted completely independently of each other. In other words, it is not because the appointment of the liquidator has to be confirmed by the court that this is automatically also required for the approval of the distribution plan.
In the WVV, the powers of the liquidator (s) are described in a more extensive manner than was the case in the old Company Code. The liquidator is authorized for all actions that are necessary or useful for the liquidation of the company. In addition, the liquidator can take a number of actions that are listed in art. 2:88 CAC only after approval of the general meeting. This provision is mandatory.
Additional payments to shareholders
Without authorization from the general meeting, the liquidator may request additional payments to which the shareholders have committed if the liquidator deems it necessary (i) to pay the debts of the company and the costs of liquidation, or (ii) to ensure equal treatment of to guarantee the shareholders.
Forgotten assets and liabilities
By closing the liquidation, the shareholders become by law automatically undivided owners, each for their own part, of all the active assets of the company, even if these are not known at the time of the liquidation.
In addition, a liability is created on the part of the shareholders of a dissolved BV, CV or NV for unpaid corporate debts for which no sufficient amount was consigned, if they actually had knowledge (subjective bad faith) or should have known at the time of the closure. (objective bad faith) of the existence of such debts.
In the event of dissolution and liquidation in one deed, the shareholders are always liable for unpaid corporate debts, irrespective of whether they were in bad or good faith (without prejudice to the story of the members of the board of directors who last held office, if the shareholders were in good After all, this procedure offers fewer guarantees to corporate creditors, which justifies the increased liability.
This liability is limited for each shareholder to the amount equal to the sum of the contribution repaid to him and his share in the liquidation balance as received before or at the time of the liquidation of the company. This also applies to shareholders who transferred their shares before the closing of the liquidation, up to the amount of the advances they received. In the event of a deficient liquidation, the shareholders cannot therefore be held liable on the basis of this provision.
Reopening of the liquidation
The unpaid creditors can claim the reopening of the liquidation if the following conditions are cumulatively fulfilled:
it concerns a deficit liquidation;
assets are discovered after the liquidation is closed. When liabilities are discovered, one can rely on the liability of the shareholders as set out above;
only unpaid creditors can request the reopening; and the claim for reopening is brought against the last liquidator in office.
The reopening is not automatic and will only be ordered by the court if the value of the forgotten asset exceeds the cost of the reopening.
Dissolution and liquidation in one deed (so-called one-day procedure)
In the WVV it is possible to dissolve and settle a company in one deed in which not all debts to third parties were repaid or a sufficient amount to pay them. In that case, a prior written agreement is required from these creditors. In addition, the statutory auditor, or if no statutory auditor has been appointed, the statutory auditor or external auditor must confirm this in writing in his audit report.
There is also a relaxation with regard to the attendance requirement:
BV: unanimity of the shareholders present or represented insofar as they represent at least half of the total number of issued shares.
NV: unanimity of the shares present or represented insofar as they represent at least half of the capital.
1. 2 Dissolution by operation of law
This form of dissolution can be briefly summarized:
Expiry of the term for which the company has been entered into
Fulfill an expressly resolutive condition that the partners or shareholders had included in the articles of association
1. 3 Dissolution by judicial decision
The law provides that the chairman of the company court of the place where the company has its registered office, seated as in summary proceedings at the request of a shareholder or partner, can pronounce the dissolution of a company for legal reasons.
What does "seated as in summary proceedings" mean?
This means that the chairman of the company court remains competent to handle the case (as opposed to the judge hearing the application for interim measures). He is allowed to do this according to the rules of summary proceedings because the urgency of the case is assumed. It is therefore not necessary to go to the judge hearing the application for interim measures. For example, there are much shorter deadlines, which means that the case is dealt with more quickly.
What are "legal reasons"?
The law assumes that the following situations are covered by “legal reasons”:
The shareholder or partner has largely neglected his duties within the company
Due to an ailment, the shareholder or partner is no longer able to perform his obligations
All other cases that prevent the normal continuation of the company's activity (e.g. an insoluble conflict between partners)
Failure to file annual accounts.
A reason for judicial dissolution is when a company fails to comply with its legal obligation to file annual accounts. The court can then pronounce the dissolution at the request of any interested party, the public prosecution service or after notification by the Chamber for companies in difficulty.
This claim can only be instituted at the earliest seven months after the closing date of the financial year, and is brought against the company.
In the event of notification by that Chamber, the judge has two options. He can impose a period of regularization within which the company has time to prepare and file its annual accounts under the watchful eye of the Chamber for companies in difficulty, or it can immediately proceed to dissolve the company.
The court can decide to dissolve when:
The company in question has been officially deleted because it:
a. had not had active capacities, activities or business units registered in the Crossroads Bank for Enterprises for a minimum of three years;
b. is registered in the Crossroads Bank for Enterprises with active status;
c. does not have any current applications for admission or capacity, registered in the Crossroads Bank for Enterprises;
d. Has not made any changes regarding the registered data in the Crossroads Bank for Enterprises for 7 years;
e. Since 7 years, has not published any other publication than that of the annual accounts, in the Appendices of the Belgian Official Gazette or in the Belgian Official Gazette.
These are cumulative conditions.
2. When, despite two convocations with thirty days in between (the second of which was done by court letter), the company has not appeared before the Chamber of Business in Trouble.
3. When the directors of the company do not have the necessary professional or management skills that are imposed by law, decree or ordinance (eg certain diplomas).
In case of a request from an interested party or the Public Prosecution Service, the judge will grant a regularization period of at least three months. In any case, he will first refer the case to the Chamber for Firms in Difficulty, which will have to report. After the imposed term has expired, the chairman of the company court will decide on the dissolution, based on the report of the amer.
The dissolution will be included in a judgment and will take effect from the date it is pronounced. The judgment is open to objection and appeal.
Each company is deemed to continue to exist after its dissolution until its closure. That survival then serves merely to effect that liquidation.
After the dissolution of a company, the court will appoint a liquidator.
According to the law, the liquidator may perform all acts that he deems necessary or useful to bring the liquidation of the company to a successful conclusion.
He arranges the distribution of the capital (assets) of the company in order to be able to pay the debts (the liabilities). For example, the liquidator may choose to publicly sell any real property of the company if he deems the proceeds necessary to pay the debts. He can compel the shareholders to pay the capital that has not yet been paid up, or can appeal to the managers to pay their outstanding current account debit.
The liquidator represents the company in legal proceedings vis-à-vis third parties.
However, there are also legal restrictions on the liquidator's actions; for example, the law states that he must obtain prior authorization from the Enterprise Court for a number of actions.
At the end of the liquidation, the liquidator submits a report to the competent Enterprise Court. The court will then rule on the closure of the liquidation.
If creditors are of the opinion that an active asset of the company has been forgotten, they can claim the reopening of liquidation if their claim has not been paid in full. They then file that claim against the liquidator.
However, the court will only reopen the liquidation if the asset in question is worth more than the costs of the reopening procedure.
2.1 Liquidation by bankruptcy
In a bankruptcy procedure, there is also a liquidation of the company. Instead of a “liquidator”, the court will appoint a trustee in charge of the effective liquidation of the company. He will have to ensure that, as far as possible, an asset is realized with which creditors can be paid.
Filing for bankruptcy often offers a (cheaper) alternative to the procedure of judicial dissolution and liquidation.