When a company is going through a complicated financial period, the judicial reorganisation procedure (JRP) can help it avoid bankruptcy and get back on its feet. How does it work and who can benefit from it?
Economic difficulties do not always mean the end of a business. The Judicial Reorganisation Procedure (JRP) offers managers a legal framework to negotiate with their creditors and reorganise their business, while benefiting from the court's temporary protection against prosecution. With the JRP, 'the law provides for up to 80% debt relief', explains Fryderyk de Peslin Lachert, lawyer and insolvency expert.
A regulated procedure
Supported by the Brussels region, the JRP is based on an application made to the business court. If it is accepted, the company obtains a reprieve during which creditors cannot demand immediate payments. This respite allows a recovery plan to be put in place, in one of three forms (according to the Brussels Chamber of Commerce, see end of the article):
- The amicable agreement, concluded directly with certain creditors.
- The collective agreement, which involves all creditors and requires court approval.
- Transfer under judicial authority, to transfer the company to another entity in order to preserve its business.
Who can apply for a JRP?
According to the Royal Federation of Belgian Notaries, ‘any natural person who carries out a professional activity on a self-employed basis, any legal person or any other organisation without legal personality’ is eligible for a JRP. Self-employed persons, SMEs and large companies can apply, provided they can prove that they are in financial difficulty but still viable.
The application must contain up-to-date financial documents, an assessment of debts and a clear strategy for ensuring the continuity of the business. The JRP is not granted automatically: the court analyses the situation and may refuse the application if the company does not show realistic prospects of recovery.
To be used at the right time
While the JRP offers a welcome break for restructuring a business, this procedure also imposes strict discipline: the company must prove its ability to turn itself around and honour its commitments. A late application or a poorly structured plan risks failure.
To avoid bankruptcy and maximise the chances of success, Beci's experts can help entrepreneurs apply to the business court for a JRP. For more information, click here.