Payment arrears between companies
1. Insolvency law has been thoroughly reformed by the law of 11.08.2017 (entered into force 01.05.2018).
One of the most striking innovations concerns the broadening of the scope of the bankruptcy.
Any company can be declared bankrupt. The liberal professions (including lawyers, notaries, doctors, accountants, pharmacists,…), non-profit associations, foundations, are now regarded as companies, also for the purposes of the insolvency law, so they can file for bankruptcy or be declared bankrupt.
2. The law defines the 'practitioner of a liberal profession' as follows:
"Any enterprise whose activity mainly consists in performing, independently and under its own responsibility, intellectual achievements for which a prior education and continuous training is required and which is subject to a doctrine of ethics, the observance of which by or pursuant to a law indicated disciplinary institution can be enforced."
The liberal profession will also be able to invoke the judicial reorganization as a result of which debts are temporarily frozen in order to still save the professional activity.
The new policy is therefore broader, to offer all types of activities the same possibilities, and thus also to give liberal professionals the opportunity to start a new activity after or even during the bankruptcy procedure.
3. On the other hand, a liberal profession or non-profit association will be able to invoke the law of 02.08.2002 regarding payment arrears in commercial transactions between companies against other companies.
This interest is high.
For the first semester of 2019, this has been set at 8%.
This interest rate applies to commercial transactions, in particular transactions between companies or between companies and contracting authorities or contracting authorities that lead to the supply of goods or the provision of services for remuneration.
It does not apply in civil matters, nor in commercial matters (eg for a transaction between a trader and a private individual). In that case, the statutory interest applies.
If the parties have not agreed otherwise, if the debtor does not pay within the agreed payment term or, in the absence of such a term, within the payment term specified in Article 4 of the Commercial Arrangements Late Payment Act 1 from the following day, by operation of law and without notice of default, right to payment of interest against interest in late payment commercial transactions.[1]
Conclusion: the qualification as a company creates various possibilities, both for the company in difficulty (bankruptcy, judicial reorganization) and the company that wishes to apply the interest for late payment commercial transactions.
4. Payment difficulties often lead to difficulties with the banks and discussions about financing. A recurring discussion concerns the reinvestment fee. A maximum reimbursement of 6 months applies with a loan, and not with a credit facility. A series of judgments of Cassation have intervened in this regard in which the criteria are listed.[2]
The creditor must also be careful not to take too much procrastination when reclaiming an authorized credit. The Court may be inclined to moderate and reduce the interest. [3]
[1] 30 days after receipt of the invoice, or after receipt of the day of receipt of the goods
or services, or in the case of agreements with control and invoice earlier from the moment of acceptance)
[2] see Court of Cassation 21.10.2019 and Court of Cassation 18.6.2020, Banking and Financial Law 2020/4 pag 233 with full analysis by L.Frankignoul
(3] Court of Appeal Antwerp, 10.10.2019, NjW 10.2.2021 pag. 125