A new European directive could strengthen the obligations of company directors when a business becomes insolvent. Directive (EU) 2026/799 of 30 March 2026, known as “Insolvency III”, aims, among other things, to improve the recovery of claims and prevent a deterioration in the financial situation from further reducing creditors’ chances of recovering their debts.
An obligation to act within three months
The directive provides that Member States will have to require the directors of a company that has become insolvent to apply for the opening of insolvency proceedings within a period that may not exceed three months from the moment they know, or can reasonably be considered to know, that the company is insolvent.
The concept of a director is to be interpreted broadly. It covers individuals who take, or should take, the essential decisions concerning the management of the company.
However, Member States may provide for exceptions or adjustments to this obligation. For example, a suspension may be allowed where directors take measures that protect creditors to a level equivalent to that which would result from the opening of insolvency proceedings.
What about Belgium?
Belgian law already provides for a relatively strict obligation to act. Article XX.102 of the Belgian Code of Economic Law currently requires a debtor to file for bankruptcy within one month of ceasing payments, provided that the conditions for bankruptcy are met. This obligation is, among other things, suspended when judicial reorganisation proceedings are initiated and during the suspension period.
The European directive therefore does not automatically mean that the Belgian deadline will be extended to three months. Belgium still needs to transpose the new rules into national law and determine how they will interact with the existing legal framework. The transposition must take place no later than 22 January 2029.
Increased personal liability
The important new element also concerns directors’ personal liability.
If a delay in opening insolvency proceedings results in a reduction in the amount that creditors are able to recover, directors may be held liable for the resulting loss, in accordance with national law.
However, directors may avoid such liability if they can demonstrate that the measures they took were objectively capable of achieving a result for creditors that was at least equivalent.
