The Court of Cassation validated a restrictive interpretation of the notion of business, which runs the risk of excluding certain self-employed workers from access to the PRJ and bankruptcy.
Since the entry into force of Book XX of the Economic Law Code, on 1er May 2018, the freelancer as an individual is legally considered a business and therefore liable to be declared bankrupt.
More recently, the European Parliament voted on Directive 2019/1023, which invites Member States to facilitate the relaunch of activity by bankrupt self-employed workers. On his side, the Belgian State must transpose this European directive in the coming weeks align our insolvency law with the objectives set by the European Parliament.
In particular, it is about redefining the notion of business. Currently, any natural person who carries out his professional activity on his own is considered a company alongside companies, non-profit organizations and foundations. This also has the consequence these people may benefit from a judicial recovery process or be declared bankrupt.
Some saw this as a risk that self-employed business leaders would systematically go into personal bankruptcy in the event of the bankruptcy of their company.
However, the bankruptcy regime is more favorable than the collective settlement of debts, reserved for consumers and individuals, insofar as it allows, for example, the bankrupt to benefit from the total or partial cancellation of their debt. Some saw this as a risk that self-employed business leaders would systematically go into personal bankruptcy in the event of the bankruptcy of their company.
a controversial decision
This sparked controversy that recently resulted in a March 18 ruling by the Court of Cassation in which the Court validates the thesis of the strict interpretation of the concept of business. In short, the Court considers that, in order to claim the status of an independent company, it is necessary to have an “autonomous organization”.
Since that judgment, several substantive decisions have a rather broad interpretation of the autonomous organization concept, to avoid quickly excluding business leaders from bankruptcy or judicial recovery process.
“By wanting to exclude certain self-employed workers, such as business leaders, we are putting at risk other self-employed workers that the European directive specifically wanted to protect.”
The problem is that this notion is not defined by law, which raises a question for a number of freelancers, such as brokers, real estate agents, trainee lawyers, trainee accountants, trainee doctors and, of course, ‘business’ managers. . “By wanting to exclude certain self-employed workers, such as business leaders, we put at risk other self-employed workers that the European directive specifically aimed to protect”regrets Nicholas Ouchinsky, lawyer at the Brussels Bar Association (Lexlitis).
Deprived of a fresh start
Since the judgment of the Court of Cassation, a number of professors, lawyers and magistrates have severely criticized this position, denouncing the dangers it entails. Why? Why if we exclude these self-employed from the notion of business, these people will be deprived of a new beginning.
“Should we close the door on insolvency law to a number of people on the pretext that they have no business status?”
“All independent directors of companies, for example the small plumber who went to SRL, would be required to contact a debt intermediary and would be under guardianship for seven years, time to repair their business failure,” warns Nicholas Ouchinsky. “Should we close the door on insolvency law to a number of people on the pretext that they have no business status?”he asks.
The issue is all the more serious as the offices of Ministers Pierre-Yves Dermagne (Economy) and Vincent Van Quickenborne (Justice) are working on the matter within the framework of the the transposition of the European directive.
Faced with the turn of events, Nicholas Ouchinsky fears that the balance is tipping in favor of proponents of the restrictive thesis whose objective is to redefine the notion of business by expressly excluding business leaders. It would be a mistake, according to him, especially since there are already safeguards in the law, such as professional prohibitionto prevent misuse of insolvency law.
- The Court of Cassation upheld a restrictive interpretation of the concept of company.
- Objective: to prevent company directors from carrying out their activity on their own account go into personal bankruptcy in case of bankruptcy of your company.
- PRJ and bankruptcy are regimes more favorable than collective debt settlement reserved for individuals.
- By targeting business leaders, you run the risk of excluding a whole range of self-employed workers. access to PRJ and bankruptcy.