Strelia assisted a franchisor in an action brought against a personal surety – a company director – who attempted to escape his obligations by filing for his personal bankruptcy. However, according to the Court of Cassation, a company director cannot automatically be considered as an enterprise and therefore is not capable of filing for bankruptcy.
In a decision of 9 February 2023, the Court of Cassation overturned a judgment of the Brussels Court of Appeal by which it admitted that a natural person appointed as the sole director of a company qualified as an “enterprise” and could therefore file himself for bankruptcy following the bankruptcy of the company of which he was the sole director.
This decision confirms a first decision of the Court of Cassation of 18 March 2022 on the same issue.
The Court of Cassation confirms that a natural person can only qualify as an “enterprise” within the meaning of Article I.1, 1° of the Economic Law Code (which is defined as: "any natural person who carries out a professional activity on a self-employed basis") – and benefit from the bankruptcy regime –, when that person has formed an organisation consisting of an arrangement of material, financial or human resources with a view to carrying out a professional activity on a self-employed basis.
The Court of Cassation therefore uses the criterion of organisation as an autonomous criterion, in that a natural person who carries out a professional activity on a self-employed basis without any organisation of his/her own is not an enterprise.
The Court of Cassation thus contradicts the position of the Brussels Court of Appeal, which had ruled against the argument put forward by the franchisor assisted by Strelia. This case law will probably dissuade the bankrupt companies’ directors and sureties (and others, as the case law of the Court of Cassation is not limited to company directors) – committed to their personal assets vis-à-vis banks or other lenders – from filing themselves for bankruptcy to benefit from the "fresh start" offered by the “effacement/kwijtschelding” regime.
The Court of Cassation thus puts a stop to the widening of the scope of Book XX of the Economic Law Code, while preserving the interest of the personal surety regime.
