The new legislation on pledges over movable assets will impact existing pledges over hotel businesses and will require registration within a 12 month period.
The Belgian law dated 13 July 2013 has susbtantially amended the regime applicable to pledges over movable assets. The entry into force is to be determined by royal decree but will be at the latest on 1st December 2014.
For property financings, the main impact of such new legislation concerns pledges over the business. The main asset class that will therefore in most cases be impacted is the hotel industry. Indeed, banks financing hotel acquisitions or developments usually require, on top of the usual security package, a pledge over the business. The pledge can be granted either by the owner of the property when he is the owner of the business as well or by the operator owning the business.
Under the new legislation, the pledge over the business, as it currently exists and is currently named, will simply disappear. It will be replaced by a pledge on all the different assets composing the business.
The modification is not really significant for financings that will be put in place after the entry into force of the new legislation. Indeed, the same result will finally be achievable under the new regime.
However, for financings currently in place, the pledgor shall be required, in order to keep its rank, to register its pledge over the business within 12 months as from the entry into force of the new law.
The registration process and the publicity associated therewith is one of the key changes of the new legislation.
We will of course keep you posted as soon as the date of entry into force is known.
