Lending & Secured Finance 2020astrealaw.be/.../lending_secured_finance_2020_-_chapter_30_-_belgiu… · Countdown to 2021: The End of LIBOR and the Rise of SOFR Kalyan (“Kal”)

Lending & Secured Finance 2020A practical cross-border insight into lending and secured finance

Eighth Edition

Featuring contributions from:Allen & Overy LLP

Anderson Mori & Tomotsune

Asia Pacific Loan Market Association

Astrea

Baker & McKenzie LLP

Bravo da Costa, Saraiva – Sociedade de Advogados

Cadwalader, Wickersham & Taft LLP

Carey

Carey Olsen Jersey LLP

Cleary Gottlieb Steen & Hamilton LLP

Cordero & Cordero Abogados

Criales & Urcullo

Cuatrecasas

Davis Polk & Wardwell LLP

Debevoise & Plimpton LLP

Dechert LLP

Dillon Eustace

Drew & Napier LLC

E & G Economides LLC

Fellner Wratzfeld & Partners

Freshfields Bruckhaus Deringer LLP

Fried, Frank, Harris, Shriver & Jacobson LLP

Holland & Knight

HSBC

Jadek & Pensa

Latham & Watkins LLP

Laurence Khupe Attorneys (inc. Kelobang Godisang Attorneys)

Law firm Trpenoski

Lee and Li, Attorneys-at-Law

Loan Market Association

Loan Syndications and Trading Association

Loyens & Loeff Luxembourg S.à r.l.

Macesic & Partners LLC

Maples Group

McMillan LLP

Milbank LLP

Morgan, Lewis & Bockius LLP

Morrison & Foerster LLP

Nielsen Nørager Law Firm LLP

O’Melveny & Myers LLP

Orrick, Herrington & Sutcliffe LLP

Pestalozzi Attorneys at Law Ltd

PLMJ Advogados, SP RL

Proskauer Rose LLP

Rodner, Martínez & Asociados

Sardelas Petsa Law Firm

Seward & Kissel LLP

Shearman & Sterling LLP

Skadden, Arps, Slate, Meagher & Flom LLP

SZA Schilling, Zutt & Anschütz Rechtsanwaltsgesellschaft mbH

TTA – Sociedade de Advogados

Veirano Advogados

Wakefield Quin Limited

Walalangi & Partners (in association with Nishimura & Asahi)

White & Case LLP

Table of Contents

Expert Chapters

17

140

22

35

47

70

81

88

102

116

124

An Introduction to Legal Risk and Structuring Cross-Border Lending TransactionsThomas Mellor & Marcus Marsh, Morgan, Lewis & Bockius LLP

Countdown to 2021: The End of LIBOR and the Rise of SOFRKalyan (“Kal”) Das & Y. Daphne Coelho-Adam, Seward & Kissel LLP

Global Trends in Leveraged LendingJoshua Thompson & Korey Fevzi, Shearman & Sterling LLP

Commercial Lending 2020Bill Satchell & Elizabeth Leckie, Allen & Overy LLP

A Comparative Overview of Transatlantic Intercreditor AgreementsLauren Hanrahan & Suhrud Mehta, Milbank LLP

The Global Subscription Credit Facility and Fund Finance Markets – Key Trends and ForecastsMichael C. Mascia & Wesley A. Misson, Cadwalader, Wickersham & Taft LLP

The Continued Prevalence of European Covenant LiteJames Chesterman, Jane Summers, Daniel Seale & Karan Chopra, Latham & Watkins LLP

Liability Management: Exploring the Practitioner’s ToolboxScott B. Selinger & Ryan T. Rafferty, Debevoise & Plimpton LLP

Driving Innovation: New Opportunities for Law Firms to Partner with Global Clients in Cross-Border ProjectsHanno Erwes & Tracy Springer, HSBC

2020: Financing Private Equity Transactions in a New DecadeScott M. Zimmerman & Lindsay Flora, Dechert LLP

Acquisition Finance in Latin America: Navigating Diverse Legal Complexities in the RegionSabrena Silver & Anna Andreeva, White & Case LLP

31

41

54

73

85

93

109

120

132

The Continuing Evolution of the Direct Lending MarketMeyer C. Dworkin, David Hahn, Scott M. Herrig & Sarah Hylton, Davis Polk & Wardwell LLP

Acquisition Financing in the United States: Continuing as is in 2020?Geoffrey R. Peck & Mark S. Wojciechowski, Morrison & Foerster LLP

A Comparison of Key Provisions in U.S. and European Leveraged Loan AgreementsSarah M. Ward & Mark L. Darley, Skadden, Arps, Slate, Meagher & Flom LLP

Recent Developments in U.S. Term Loan BDenise Ryan & Kyle Lakin, Freshfields Bruckhaus Deringer LLP

An Introduction to Anti-Net Short Provisions in Syndicated LoansTodd Koretzky, Allen & Overy LLP

Analysis and Update on the Continuing Evolution of Terms in Private Credit TransactionsSandra Lee Montgomery & Michelle L. Iodice, Proskauer Rose LLP

Trade Finance on the Blockchain: 2020 UpdateJosias Dewey, Holland & Knight

An Overview of Debtor in Possession FinancingJulian S.H. Chung & Gary L. Kaplan, Fried, Frank, Harris, Shriver & Jacobson LLP

Developments in Midstream Oil and Gas Finance in the United StatesElena Maria Millerman, Christopher Richardson & Ariel Oseasohn, White & Case LLP

Editorial Chapters

1

7

14

Loan Syndications and Trading: An Overview of the Syndicated Loan MarketBridget Marsh & Tess Virmani, Loan Syndications and Trading Association

Loan Market Association – An OverviewNigel Houghton & Hannah Vanstone, Loan Market Association

Asia Pacific Loan Market Association – An OverviewAndrew Ferguson & Rosamund Barker, Asia Pacific Loan Market Association

Table of Contents

Expert Chapters Continued

Q&A Chapters

145

154

Sustainability Finance – Recent Growth and DevelopmentJai S. Khanna & José A. Morán, Baker & McKenzie LLP

The Section 363 Sale & Acquisition Financing Process: Key Considerations from a Buyer’s PerspectiveLisa M. Schweitzer, Margaret S. Peponis, Katherine R. Reaves & Ashley A. Kerr, Cleary Gottlieb Steen & Hamilton LLP

150

159

2020 Private Credit Overview and Update: Financing the Middle MarketJeff Norton, Sung Pak, John J. Rapisardi & Joseph Zujkowski, O’Melveny & Myers LLP

Cross-Border Derivatives for Project Finance in Latin AmericaFelicity Caramanna, Credit Agricole Corporate and Investment Bank

163 AngolaBravo da Costa, Saraiva – Sociedade de Advogados / PLMJ: João Bravo da Costa & Joana Marques dos Reis

170 AustriaFellner Wratzfeld & Partners: Markus Fellner & Florian Kranebitter

277 DenmarkNielsen Nørager Law Firm LLP: Thomas Melchior Fischer & Brian Jørgensen

285 EnglandAllen & Overy LLP: Oleg Khomenko & Jane Glancy

181 BelgiumAstrea: Dieter Veestraeten

188 BermudaWakefield Quin Limited: Erik L Gotfredsen & Jemima Fearnside

196 BoliviaCriales & Urcullo: Andrea Mariah Urcullo Pereira & Daniel Mariaca Álvarez

203 BotswanaLaurence Khupe Attorneys (inc. Kelobang Godisang Attorneys): Wandipa T. Kelobang, Monica Gamu Makhala & Baboloki Mathware

210 BrazilVeirano Advogados: Lior Pinsky, Ana Carolina Barretto & Amanda Leal

218 British Virgin IslandsMaples Group: Michael Gagie & Matthew Gilbert

226 CanadaMcMillan LLP: Jeff Rogers & Don Waters

236 Cayman IslandsMaples Group: Tina Meigh & Lucy Sleep

244

260

ChileCarey: Diego Peralta, Fernando Noriega & Diego Lasagna

CroatiaMacesic & Partners LLC: Ivana Manovelo

252 Costa RicaCordero & Cordero Abogados: Hernán Cordero Maduro & Ricardo Cordero B.

295 FranceOrrick Herrington & Sutcliffe LLP: Emmanuel Ringeval

306 GermanySZA Schilling, Zutt & Anschütz Rechtsanwaltsgesellschaft mbH: Dr. Dietrich F. R. Stiller, Dr. Andreas Herr & Dr. Michael Maxim Cohen

315 GreeceSardelas Petsa Law Firm: Konstantina (Nantia) Kalogiannidi & Vasiliki Liappi

323 IndonesiaWalalangi & Partners (in association with Nishimura & Asahi): Hans Adiputra Kurniawan, Anggarara C. Pratiwi Hamami & Ophelia Novka Kusuma Asri

330 IrelandDillon Eustace: Conor Keaveny, Jamie Ensor & Richard Lacken

340 ItalyAllen & Overy Studio Legale Associato: Stefano Sennhauser & Alessandra Pirozzolo

349 JapanAnderson Mori & Tomotsune: Taro Awataguchi & Yuki Kohmaru

358 JerseyCarey Olsen Jersey LLP: Robin Smith & Laura McConnell

368 LuxembourgLoyens & Loeff Luxembourg S.à r.l.: Antoine Fortier Grethen

376 MozambiqueTTA – Sociedade de Advogados / PLMJ: Gonçalo dos Reis Martins & Nuno Morgado Pereira

268 CyprusE & G Economides LLC: George Economides & Virginia Adamidou

384 NetherlandsFreshfields Bruckhaus Deringer LLP: Mandeep Lotay & Tim Elkerbout

398

392 North MacedoniaLaw firm Trpenoski: Natasha Trpenoska Trencevska & Bojana Paneva

PortugalPLMJ Advogados, SP RL: Gonçalo dos Reis Martins

Table of Contents

Q&A Chapters Continued

414

405 RussiaMorgan, Lewis & Bockius LLP: Grigory Marinichev & Alexey Chertov

434

SingaporeDrew & Napier LLC: Pauline Chong, Renu Menon, Blossom Hing & Ong Ken Loon

424 SloveniaJadek & Pensa: Andraž Jadek & Žiga Urankar

South AfricaAllen & Overy (South Africa) LLP: Lionel Shawe

444 SpainCuatrecasas: Héctor Bros & Manuel Follía

455 SwedenWhite & Case LLP: Carl Hugo Parment & Magnus Wennerhorn

462 SwitzerlandPestalozzi Attorneys at Law Ltd: Oliver Widmer & Urs Klöti

471

495

TaiwanLee and Li, Attorneys-at-Law: Hsin-Lan Hsu & Odin Hsu

USAMorgan, Lewis & Bockius LLP: Thomas Mellor & Rick Eisenbiegler

480 United Arab EmiratesMorgan, Lewis & Bockius LLP: Victoria Mesquita Wlazlo & Tomisin Mosuro

507 VenezuelaRodner, Martínez & Asociados: Jaime Martínez Estévez

Lending & Secured Finance 2020

Chapter 30 181

Belgium

Astrea Dieter Veestraeten

Belgium

association of the financial sector, outstanding loans for Belgian companies increased by 4% to EUR 162.6 billion by mid-2019 in comparison with a year earlier. Demand by Belgian companies for loans declined slightly by 4% in the third quarter of 2019, while banks issued 2.4% fewer loans. In general, the lending climate remains borrower-friendly, as lending conditions are favourable and interest rates remain relatively low, a trend which is also to be noted in the rest of the euro zone. According to the October 2019 Bank Lending Survey of the ECB, credit stand-ards eased slightly for loans to enterprises in the third quarter of 2019 and demand for loans remained more or less unchanged, increasing slightly for SMEs and decreasing for large firms.

2 Guarantees

2.1 Can a company guarantee borrowings of one or more other members of its corporate group (see below for questions relating to fraudulent transfer/financial assistance)?

Yes, provided that the guarantee falls within the guarantor’s corporate purpose (see below) and corporate benefit.

The corporate benefit requirement should be assessed by the guarantor’s board of directors, taking into account: (i) any direct and/or indirect benefits the guarantor derives from the loan; (ii) the balance between the risk relating to the guarantee and the benefit for the guarantor; and (iii) the guarantor’s financial capacity.

It is market practice for Belgian subsidiaries granting a cross-stream or up-stream guarantee to include so-called “limitation language” in credit agreements, guarantees and security docu-ments. Although not required by law, this reduces (but does not exclude) the risk of violating Belgian corporate benefit rules.

2.2 Are there enforceability or other concerns (such as director liability) if only a disproportionately small (or no) benefit to the guaranteeing/securing company can be shown?

If the corporate benefit requirement is not met, the guarantee can be held null and void and the directors of the company may be held liable (i) by the company for negligence in the manage-ment of the company, and (ii) by third parties in tort. However, these rules have been seldom tested under Belgian law, and there is only limited case law on this issue.

2.3 Is lack of corporate power an issue?

Yes, a guarantee must always serve the guarantor’s corporate purpose, as mentioned in its articles of association. However, if

1 Overview

1.1 What are the main trends/significant developments in the lending markets in your jurisdiction?

The new Belgian Code of Companies and Associations entered into force on 1 May 2019, bringing a fundamental reform of Belgian company law. The new Companies Code modernises and improves the flexibility of the Belgian rules governing both companies and associations. In the field of financing, amongst others, the rules on financial assistance have been simplified and change of control clauses no longer need the prior approval of the general meeting of shareholders, unless in the case of a listed company. The new Companies Code now also allows for the incorporation of a private limited company (besloten vennootschap/société à responsabilité limitée) without share capital (but with sufficient net assets in light of its activities) or the possi-bility of having only one sole shareholder in a limited company, which makes the law more flexible and allows for easier group structures.

On 1 December 2020, new rules on B2B unfair contractual terms will enter into force. For the first time, clauses in B2B contracts will be prohibited that are found to create an evident imbalance between the rights and obligations of the parties. Save for the general prohibition, a black list that prohibits certain clauses in all situations (e.g. the right to unilaterally interpret one of the clauses of the contract) and a grey list which includes clauses that are presumed to be prohibited, unless proven to the contrary (e.g. unreasonable damages for failure to perform), will be introduced as well.

These rules on B2B contracts will, for now, not apply to finan-cial services, including B2B lending agreements. However, the new act foresees that a Royal Decree may declare some of these rules applicable to financial services. The parliamentary acts accompanying the new act indicate that this will rather happen in the near future, as this provision does not aim to exclude financial services entirely, but merely to let the financial regu-lators draft rules that take the particularities of the financial sector into account. Once declared applicable, new B2B lending agreements will have to be carefully reviewed for any clauses that may be incompatible with the new act.

1.2 What are some significant lending transactions that have taken place in your jurisdiction in recent years?

As there are no official reports on lending transactions in Belgium, we cannot comment on any specific lending transac-tions over the past few years. According to Febelfin, the Belgian

© Published and reproduced with kind permission by Global Legal Group Ltd, London

182 Belgium


pledged by means of a pledge on the entire business that must be registered with the national pledge register to be effective against third parties.

A mortgage mandate (i.e., an irrevocable proxy to vest a mort-gage) does not create any security right in rem and will only become perfected and take rank as of the moment of its conversion.

3.4 Can collateral security be taken over receivables? Briefly, what is the procedure? Are debtors required to be notified of the security?

Yes, a pledge over receivables can be created by a pledge agree-ment, which is perfected and enforceable against third parties upon its execution. However, the pledge only becomes enforce-able against the debtor of the pledged receivable as of the date of notification of the pledge to, or the acknowledgment of the pledge by, this debtor.

3.5 Can collateral security be taken over cash deposited in bank accounts? Briefly, what is the procedure?

Bank deposits qualify as receivables held against the account bank and can be pledged by way of a pledge agreement. The pledge only becomes enforceable against the account bank as of the date of notification of the pledge to, or the acknowledgment of the pledge by, the account bank. The same procedure as set out in question 3.4 applies.

3.6 Can collateral security be taken over shares in companies incorporated in your jurisdiction? Are the shares in certificated form? Can such security validly be granted under a New York or English law-governed document? Briefly, what is the procedure?

Yes, although restrictions can apply in the articles of associa-tion or approval by a majority of the shareholders is required for certain corporate forms such as the private limited company. Foreign law chosen by the parties may govern the contractual aspects of the pledge, except for the proprietary aspects of the security which will be governed by Belgian law if the company is located in Belgium, or if the dematerialised shares are regis-tered in a special account in Belgium. To become effective: (1) a pledge on registered shares must be recorded in the company’s share register; and (2) a pledge on dematerialised assets must be registered in a special financial account.

3.7 Can security be taken over inventory? Briefly, what is the procedure?

Yes, as a non-possessory pledge on inventory, which must be registered in the national pledge register to be effective against third parties.

3.8 Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility (see below for questions relating to the giving of guarantees and financial assistance)?

A Belgian company can grant a security interest in both situ-ations, save for the limitations of the corporate purpose and

the corporate purpose test is not met, the guarantee can only be held void towards a third party if that party knew or should have known that the transaction was ultra vires. Lenders are reason-ably expected to verify a borrower’s or guarantor’s articles of association prior to granting a loan.

2.4 Are any governmental or other consents or filings, or other formalities (such as shareholder approval), required?

In general, no. However, in case of a listed public limited liability company (naamloze vennootschap/société anonyme), the guar-antor’s general shareholders’ meeting must approve any change of control clauses in the finance documents which may consid-erably influence the assets of the company or create a consider-able debt or obligation for the company, whereby these share-holders’ resolutions must be filed with the commercial court. If not, such change of control clauses are null and void.

2.5 Are net worth, solvency or similar limitations imposed on the amount of a guarantee?

Belgian law does not impose any specific solvency limitations; the general test for assessing the amount of the guarantee is the corporate benefit test (see above). In view hereof, guarantee limitation wording based on the net asset value of the guarantor is usual in Belgium.

2.6 Are there any exchange control or similar obstacles to enforcement of a guarantee?

There are no such exchange controls or other obstacles in Belgium.

3 Collateral Security

3.1 What types of collateral are available to secure lending obligations?

The following types of collateral are usual in Belgium: mortgage on real estate; mortgage mandates; and pledge on (i) movable assets, (ii) the entire business, (iii) financial instruments (including shares and bank accounts), (iv) receivables, or (v) IP rights.

3.2 Is it possible to give asset security by means of a general security agreement or is an agreement required in relation to each type of asset? Briefly, what is the procedure?

In principle, a separate pledge agreement will be required for each asset type. Another possibility is a non-possessory pledge on the pledgor’s entire business, which must be registered with the national pledge register in order to be enforceable.

3.3 Can collateral security be taken over real property (land), plant, machinery and equipment? Briefly, what is the procedure?

Security over real property is created by a mortgage in the form of a public deed before a notary and must be registered with the mortgage register. It can, under certain conditions, either include plant, machinery and equipment, or these can be


183Astrea


funds not being used several times, the creation of an unavailable reserve for the value of the financial assis-tance will be required. Finally, the shareholders meeting has to authorise the transaction, which will then be carried out under the responsibility of the management body that draws up a special report for this purpose.

(b) Shares of any company which directly or indirectly owns shares in the company

The financial assistance rules do not apply when a Belgian company guarantees or secures borrowings used to acquire shares in a parent or sister company. However, it should be verified if the corporate interest test for such transaction is met.

(c) Shares in a sister subsidiary See (b) above.

5 Syndicated Lending/Agency/Trustee/Transfers

5.1 Will your jurisdiction recognise the role of an agent or trustee and allow the agent or trustee (rather than each lender acting separately) to enforce the loan documentation and collateral security and to apply the proceeds from the collateral to the claims of all the lenders?

Yes, the financial collateral act (which applies to financial collat-eral such as shares and bank accounts) and the new rules in the Civil Code with respect to pledges on movable assets explicitly recognise the concept of a security agent. For mortgages, the concept of a security agent does not yet exist and a parallel debt structure might be required. The concept of trust does currently not exist in Belgian law.

5.2 If an agent or trustee is not recognised in your jurisdiction, is an alternative mechanism available to achieve the effect referred to above, which would allow one party to enforce claims on behalf of all the lenders so that individual lenders do not need to enforce their security separately?

Alternative mechanisms to allow one party to enforce the loan documentation and collateral security include parallel debt structures or joint creditorship.

5.3 Assume a loan is made to a company organised under the laws of your jurisdiction and guaranteed by a guarantor organised under the laws of your jurisdiction. If such loan is transferred by Lender A to Lender B, are there any special requirements necessary to make the loan and guarantee enforceable by Lender B?

The loan can be transferred by (a) assignment, or (b) novation. (a) Upon an assignment, all accessory rights and security will

follow the principal debt (i.e. the loans). All underlying debtors must be notified for the transfer to be effective. An unnotified debtor in good faith remains entitled to act (e.g. by paying or applying set-off to the original lender).

(b) Upon novation, new debt is created. Therefore, all acces-sory rights and security attached to the original debt will cease to exist, unless expressively stated otherwise.

A transfer of a mortgage backed claim must be registered with the mortgage register. This requires a notarial deed.

A transfer of a registered pledge on movable assets must be registered with the national pledge register. This can be done online.

benefit (see questions 2.2 and 2.3) and financial assistance (ques-tion 4.1).

3.9 What are the notarisation, registration, stamp duty and other fees (whether related to property value or otherwise) in relation to security over different types of assets?

A mortgage must be vested by notarial deed and registered with the mortgage register; this entails the payment of registration duties (1.30% of the secured amount), notary fees and possible additional costs.

The registration of a pledge on movable assets in the national pledge register costs up to €500 per registration.

3.10 Do the filing, notification or registration requirements in relation to security over different types of assets involve a significant amount of time or expense?

Registration of a pledge in the national pledge register can be done online within one hour. The pledge is effective immedi-ately after payment of the registration fee. Mortgages take longer, as they require notary involvement (at least three to four weeks).

3.11 Are any regulatory or similar consents required with respect to the creation of security?

In general, none.

3.12 If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

In principle, no. Security can also be vested for future debts.

3.13 Are there particular documentary or execution requirements (notarisation, execution under power of attorney, counterparts, deeds)?

In general, no. However, a notarial deed is required to docu-ment a mortgage.

4 Financial Assistance

4.1 Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance or refinance the direct or indirect acquisition of: (a) shares of the company; (b) shares of any company which directly or indirectly owns shares in the company; or (c) shares in a sister subsidiary?

(a) Shares of the company Under the new Belgian Companies Code, a company is

allowed to grant financial assistance in the form of a loan, a guarantee or a security to secure a loan which shall or has been used to fund directly or indirectly the acquisi-tion of shares of the company by a third party as long as: (i) the rights of the minority shareholders are not disre-garded; and (ii) the continuity of the company is not jeop-ardised. Only funds that are eligible for distribution can be used to provide financial assistance. To avoid available


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7 Judicial Enforcement

7.1 Will the courts in your jurisdiction recognise a governing law in a contract that is the law of another jurisdiction (a “foreign governing law”)? Will courts in your jurisdiction enforce a contract that has a foreign governing law?

A Belgian court will recognise the parties’ contractual choice of foreign law, save for: (i) any mandatory provisions of other jurisdictions; (ii) applicable EU law; (iii) overriding mandatory provisions of the jurisdiction in which the obligations arising out of the contract are performed; (iv) Belgian overriding mandatory provisions; or (v) Belgian public policy provisions that might override the foreign governing law and apply directly to the contract.

7.2 Will the courts in your jurisdiction recognise and enforce a judgment given against a company in New York courts or English courts (a “foreign judgment”) without re-examination of the merits of the case?

In principle, a Belgian court will recognise and enforce such judgment without re-examining the merits of the case, save for some exceptions (e.g. a judgment that is manifestly contrary to Belgian public policy or that violated the rights of defence).

7.3 Assuming a company is in payment default under a loan agreement or a guarantee agreement and has no legal defence to payment, approximately how long would it take for a foreign lender to (a) assuming the answer to question 7.1 is yes, file a suit against the company in a court in your jurisdiction, obtain a judgment, and enforce the judgment against the assets of the company, and (b) assuming the answer to question 7.2 is yes, enforce a foreign judgment in a court in your jurisdiction against the assets of the company?

(a) The regular judicial procedures apply if one (or both) of the parties is (are) registered with a European database of enterprises. It will take at least one year to obtain an enforceable judgment, which is, in principle, executable with immediate effect, regardless of any appeal.

Summary proceedings are possible for undisputed debts and usually provide an enforceable judgment within three months, unless the defendant disputes the claim and ordi-nary proceedings therefore must be held.

(b) In principle, an exequatur is required to enforce a foreign judgment in Belgium and could be obtained within 15–30 days, unless a party files an opposition.

The period for the lender to attach the borrower’s assets will depend on the attachable goods (e.g. attachment of real estate can take between one and six months due to certain formalities).

A conservatory attachment of assets is possible before a final judgment or exequatur is rendered in certain situ-ations (e.g. pending insolvency) and, generally, takes between five days and three months, depending on the assets and formalities to be fulfilled.

6 Withholding, Stamp and Other Taxes; Notarial and Other Costs

6.1 Are there any requirements to deduct or withhold tax from (a) interest payable on loans made to domestic or foreign lenders, or (b) the proceeds of a claim under a guarantee or the proceeds of enforcing security?

(a) A 30% withholding tax rate applies to interest payments to domestic and foreign lenders, unless exceptions or reduc-tions from withholding taxes apply deriving from Belgian law provisions or double-tax treaties. US and EEA credit institutions are, in principle, exempt.

(b) In principle, none.

6.2 What tax incentives or other incentives are provided preferentially to foreign lenders? What taxes apply to foreign lenders with respect to their loans, mortgages or other security documents, either for the purposes of effectiveness or registration?

None (save for the exceptions mentioned in question 6.1). The same taxes and incentives apply to Belgian and foreign lenders.

6.3 Will any income of a foreign lender become taxable in your jurisdiction solely because of a loan to, or guarantee and/or grant of, security from a company in your jurisdiction?

In principle, no.

6.4 Will there be any other significant costs which would be incurred by foreign lenders in the grant of such loan/guarantee/security, such as notarial fees, etc.?

In principle, no, since typically all costs (e.g. notary fees and registration duties for vesting a mortgage) are borne by the borrower.

6.5 Are there any adverse consequences for a company that is a borrower (such as under thin capitalisation principles) if some or all of the lenders are organised under the laws of a jurisdiction other than your own? Please disregard withholding tax concerns for purposes of this question.

The rules of the EU’s Anti-Tax Avoidance Directive (“ATAD”) on interest limitation have entered into force on 1 January 2020 for the tax year 2019 in Belgium and replace Belgian thin capi-talisation rules applicable to interest payments if a related party grants a loan or if this lender is located in a low-tax jurisdiction.

Certain reporting duties and/or proof that the payments were made in the framework of the actual and real activities may be required in order for the interest payments to be deductible, if the borrower’s lender is located in a “blacklisted” or low-tax jurisdiction.

Transfer pricing rules require the “at arm’s length principle” for borrowings from foreign affiliated lenders.


185Astrea


8 Bankruptcy Proceedings

8.1 How does a bankruptcy proceeding in respect of a company affect the ability of a lender to enforce its rights as a secured party over the collateral security?

A bankruptcy judgment suspends the enforcement rights of indi-vidual creditors. However, the suspension for creditors holding a security interest on specific movable assets and mortgagees will usually be limited up to the closing of the first minutes of the verification of the claims, unless the trustee in bankruptcy requests that they are extended up to one year from the bank-ruptcy judgment. Pledges or security assignments of bank accounts and certain financial instruments, as well as close-out netting agreements, will still be enforceable immediately despite the opening of bankruptcy.

8.2 Are there any preference periods, clawback rights or other preferential creditors’ rights (e.g., tax debts, employees’ claims) with respect to the security?

In principle, the day of cessation of payment is the day on which the company is declared bankrupt. Upon certain conditions, the trustee in bankruptcy or any interested third party can request the court to bring that date back up to six months before the date of the bankruptcy order to create a so-called “suspect period”. The court will, upon the request of the trustee in bank-ruptcy, render certain acts of the bankrupt company performed during this period (gifts, sub value contracts, payments (in kind) of undue debts and security interests granted for antecedent debts) unenforceable against the body of creditors (and some-times it will be obliged to do so).

The court can also declare other acts performed during the “suspect period” unenforceable if the third party was aware of the company’s cessation of payments. Finally, any acts or payments, whenever performed, that are to the fraudulent detri-ment of the creditors, can be declared unenforceable (actio pauliana).

8.3 Are there any entities that are excluded from bankruptcy proceedings and, if so, what is the applicable legislation?

Public bodies, and organisations without legal personality and purpose of payment to its members are excluded from bank-ruptcy proceedings.

8.4 Are there any processes other than court proceedings that are available to a creditor to seize the assets of a company in an enforcement?

Upon certain conditions, the beneficiary of a pledge over finan-cial collateral does not need prior court intervention to directly seize the assets of a company.

7.4 With respect to enforcing collateral security, are there any significant restrictions which may impact the timing and value of enforcement, such as (a) a requirement for a public auction, or (b) regulatory consents?

(a) Following the competent attachment judge’s required permission to enforce a collateral security, a bailiff or public notary will be appointed to sell the assets that the collateral security covers during a public auction. Under certain conditions, a private sale is possible.

Financial collateral or a pledge on movable assets can be enforced in a flexible manner without the prior authorisa-tion of a court.

(b) In principle, no.

7.5 Do restrictions apply to foreign lenders in the event of (a) filing suit against a company in your jurisdiction, or (b) foreclosure on collateral security?

Belgian courts may require a sworn translation of any docu-ments used as evidence and filed in a language other than the language of the court.

At the request of a Belgian defendant, a foreign plaintiff may be required to post a bond to secure payment of any expenses or damages for which the plaintiff might be liable, unless waived in an applicable treaty.

7.6 Do the bankruptcy, reorganisation or similar laws in your jurisdiction provide for any kind of moratorium on enforcement of lender claims? If so, does the moratorium apply to the enforcement of collateral security?

Upon the initiation of reorganisation or bankruptcy proceed-ings, an automatic stay of enforcement applies. However:(a) In reorganisation proceedings it still remains possible to

create new security and prior conservatory attachments can be enforced under certain conditions. Pledges on specifically pledged receivables, pledges or security assign-ments on certain financial instruments and netting agree-ments other than close-out netting agreements remain enforceable too. However, pledges or security assign-ments of bank accounts cannot be enforced, unless a payment default occurred.

(b) In bankruptcy proceedings there is an automatic annul-ment of all attachments. However, advanced attach-ment proceedings can continue under certain conditions. Financial collateral can also be enforced, even after bank-ruptcy of the pledgor.

7.7 Will the courts in your jurisdiction recognise and enforce an arbitral award given against the company without re-examination of the merits?

An arbitral award will be recognised and enforced without re-ex-amination of the merits subject to the provisions of the New York Arbitration Convention and the provisions of the Belgian Judicial Code, which, however, includes a number of reasons for which an arbitral award cannot be recognised, e.g. if it infringes Belgian public policy or if it has been insufficiently motivated.


186 Belgium


11 Other Matters

11.1 Are there any other material considerations which should be taken into account by lenders when participating in financings in your jurisdiction?

Save for those mentioned above, we do not find there to be any other material considerations to be taken into account.

9 Jurisdiction and Waiver of Immunity

9.1 Is a party’s submission to a foreign jurisdiction legally binding and enforceable under the laws of your jurisdiction?

Under Belgian law, a party is allowed to choose any foreign jurisdiction as a forum for its dispute. However, under certain conditions, Belgian courts will nevertheless maintain exclusive jurisdiction (e.g. for disputes concerning rights in rem on immov-able property located in Belgium or for overriding mandatory provisions). A Belgian court will also be competent if the case is closely tied to Belgium and it would be impossible or unrea-sonable to bring proceedings before a court of a chosen foreign jurisdiction.

9.2 Is a party’s waiver of sovereign immunity legally binding and enforceable under the laws of your jurisdiction?

Immunity can be waived by explicit consent.

10 Licensing

10.1 What are the licensing and other eligibility requirements in your jurisdiction for lenders to a company in your jurisdiction, if any? Are these licensing and eligibility requirements different for a “foreign” lender (i.e. a lender that is not located in your jurisdiction)? In connection with any such requirements, is a distinction made under the laws of your jurisdiction between a lender that is a bank versus a lender that is a non-bank? If there are such requirements in your jurisdiction, what are the consequences for a lender that has not satisfied such requirements but has nonetheless made a loan to a company in your jurisdiction? What are the licensing and other eligibility requirements in your jurisdiction for an agent under a syndicated facility for lenders to a company in your jurisdiction?

Under Belgian law, lending money (excluding consumer credit and mortgage backed credit to individuals for residential purposes) is not a regulated activity, provided that the lender does not solicit funds from the public in Belgium. As a result, investors and foreign banks can, in principle, grant a loan to a Belgian company without being licensed as a credit institution or a lender.


187Astrea


Dieter Veestraeten has more than 20 years of experience in advising large Belgian and foreign banks, companies and multinationals in the field of international financial transactions (including acquisition finance, project finance, general corporate finance), debt transactions, restructuring and financial regulatory advice. Dieter has been a partner in the Brussels office of Astrea since 2014. He is also a member of Astrea’s German Desk. Dieter holds a degree from the University of Leuven (Master of Laws, 1998), the University of Konstanz (LL.M., 2000) and the University of Antwerp (Master of Business Law, 2004).In 2006 he did a six-month internship at a renowned German law firm in Düsseldorf and he previously worked at De Bandt Van Hecke & Lagae (Linklaters) and Loyens & Loeff for 14 years.

AstreaLouizalaan 2351050 BrusselsBelgium

Tel: +32 2 215 97 58Email: [email protected]: www.astrealaw.be

Astrea is one of the leading independent full-service law firms in Belgium, with offices in both Brussels and Antwerp, the two largest economic and financial centres in the country. It currently has 13 partners and approx-imately 45 fee-earners in total. The lawyers at Astrea have a very busi-ness-oriented, pragmatic and flexible no-nonsense approach, and are known for offering good value.Astrea has extensive experience in advising Belgian and international companies in the field of financing (including general corporate finance, acquisition finance, real estate financing, project finance, structured finance and asset-based finance) and debt capital market transactions. Astrea’s banking & finance team has been involved in several domestic and cross-border transactions, both as borrowers’ and lenders’ counsel. They work together on a regular basis with international law firms.

www.astrealaw.be


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