On 1 August 2013, an act amending the Business Continuity Act ("BCA") of 31 January 2009 entered into force.
The new act tackles the most common types of abuse under the Business Continuity Act and aims to reduce the number of bankruptcies following reorganisation governed by the BCA. The basic principles of the Business Continuity Act remain unchanged, however.
Thus, the requirements to commence reorganisation proceedings under the BCA have been tightened, both with regard to the form and content of the reorganisation request, in order to avoid last-minute requests filed for the sole purpose of avoiding an adjudication in bankruptcy. The cost of initiating proceedings has also increased to EUR 1,000.
Further, all relevant financial information mentioned in the reorganisation request must now be audited by an external auditor or the company's auditor. As a preventive measure, both the latter as well as any tax consultant hired by the company is obliged to inform the court of facts that could endanger the continuity of the company and if the company's management does not take appropriate action to remedy the situation. Please note that this obligation does not concern lawyers.
In future, an electronic register will be set up, allowing creditors to remotely access information about ongoing proceedings. The details of this electronic register will be determined in a royal decree.
In order to avoid unfair competition due to the opening of reorganisation proceedings, the law now provides that the creditors' agreement must include a payment proposal for each creditor, which must be at least 15% of the creditor's claim. Further, if the agreement provides for different treatment of creditors, general creditors cannot be treated less favourably than the most-favoured ordinary (secured) creditor involved in the moratorium.
In the event of a court-supervised sale, the court-appointed trustee is only allowed to consider offers in which the price is equal to or greater than the estimated value of the assets in the context of an involuntary sale.
Finally, with regard to the transfer of employees in the framework of such a sale, the provisions have been substantially changed. The basic principles have been clarified in a new collective bargaining agreement (CBA No 102) concluded within the National Labour Council.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.