A director or manager of a company involved in a bankruptcy will often face the problem of obtaining a business license (autorisation d’établissement) for a new company or renewing another existing business license for another company.

Indeed, a person involved in a bankruptcy could be considered by the authorities, until now, as not meeting the condition of “professional integrity” which is required by law to obtain a business license (modified law of 2 September 2011 “Law on business licences”). It was not uncommon that a director or manager was required to personally reimburse outstanding public debts of the insolvent company (VAT, Tax Administration, Social Security) before having its business license renewed or being allowed to apply for a new one for another company.

A second chance

A new draft law (7989) aims to modify the Law on business licenses and provide directors and managers of a company the possibility of a “second chance”.

This second chance is open to cases of misfortune such as bankruptcy or judicial liquidation due to e,g,;

• the loss of an important customer,
• the insolvency of a series of customers,
• a pandemic (such as the recent Covid-19 pandemic),
• the health of the director/manager,
• but also in cases of mismanagement, such as errors in the company’s strategic choices.

The decision of the Ministry will be based on the report issued by the bankruptcy trustee (curateur) which states, among others, the reasons for the bankruptcy (according to the bankruptcy trustee).

In addition, the second chance will depend on the outstanding public debts which should not exceed certain thresholds.

1. For VAT, the threshold is set at 1% of the net amounts effectively paid to the VAT Administration during the last 5 financial years.
2. for direct taxes, the threshold is set at 1% of the amounts actually paid during the last 5 financial years, to the Tax Administration (The threshold does not take into account withholding tax applied by the company)
3. for social security contributions, the threshold is set at an amount equivalent to 4 months of contributions, calculated by the Social Security Authority on the basis of the monthly average of the last 24 months.

Protection in case of takeover of the management

The draft law seeks to strengthen the protection of any new director/manager taking over the business (and the business license) from a previous director/manager who concealed the financial situation of the company to obtain a discharge towards the public creditors. In such case, the former director/manager will be considered as no longer meeting the condition of professional integrity, meaning that he/she may no longer apply for a business license (or may have his/her business license removed for this specific cause.

Transfer of business to an employee

The draft law also seeks to encourage the takeover of businesses by addressing the problem of the transfer of businesses in certain professional sectors. An employee who has held a position in the company for 3 years (10 years previously) is thus given the opportunity to take over the business license. He/she will only be required to obtain the necessary professional qualifications within a period of 5 years.

Hotel business license for short term lease

Last but not least, the draft law also takes the opportunity to further regulate short term leases (e.g. Airbnb etc…). a hotel business license is now required for any person providing short term leases for a period of more than 3 months per year.

The short term lease is here defined as the commercial activity of renting out accommodation units for a visiting clientele who do not take up residence there and with a stay characterised by a daily, weekly or monthly rental.