The fastest way to kill a viable company is

The fastest way to kill a viable company is

To assume no one will fund it once the procedure starts.
It is the single most common reflex we meet around a distressed boardroom table. The directors look at their liquidity gap, conclude that fresh money is unavailable the moment a reorganisation is on the horizon, and quietly let the only window for recovery close. The reasoning feels prudent. It is, in fact, the opposite.

Belgian law has anticipated this precise problem. Since the 2023 reform transposing EU Directive 2019/1023, Book XX of the Code of Economic Law gives a clear, enforceable answer to the question every potential financier asks: "If this goes wrong, where do I stand ?"

The mechanism rests on three pillars :

1. New money is shielded, not exposed. Financing granted to support the continuation of the business during a judicial reorganisation — whether interim financing to bridge the procedure or new financing under an approved plan — is protected. It cannot be clawed back through avoidance actions on the sole ground that it was provided to a company in difficulty. The lender is no longer punished for stepping in.

2. Priority where it matters. Debts properly contracted during the procedure to continue operations are treated as debts of the estate (dettes de la masse) in a subsequent bankruptcy or liquidation. In practical terms, the fresh financier ranks ahead of the pre-existing unsecured creditors rather than joining the queue behind them. That single point of seniority is what turns an impossible conversation into a bankable one.

3. A framework, not a favour. The protection is not discretionary goodwill. It is structured by law, supervised by the enterprise court, and tied to the genuine continuation of the business. For a lender, an investor, or a supplier asked to extend terms, that structure is precisely what converts perceived risk into a measurable position.

The strategic lesson is straightforward. In restructuring, liquidity rarely disappears because money has ceased to exist. It disappears because the framework that would make that money safe is never activated. Belgian law supplies the framework — but only for directors who move while the business is still continuing, not once it has stopped.

Fresh financing is not a sign of weakness in a turnaround. Correctly secured, it is the instrument that keeps a viable company on the right side of the line.

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