ESG considerations to successfully restructure your business in Belgium

The current economic climate is difficult for many businesses, in particular for energy-intensive companies. The situation may deteriorate to such an extent that some companies may be faced with the choice between filing for bankruptcy or, if the business is still viable, implementing restructuring measures. In this article we will discuss some ways in which putting Environmental, Social and Governance (ESG) issues on the top of the corporate agenda may put your business in a better position for a successful restructuring.


Belgian companies experiencing financial difficulties have access to a whole arsenal of safeguard measures  to  support the continuity of their business. On the one hand, you can sit down with your main creditors and/or potential new investors to discuss on a consensual basis possible measures (e.g., payment plan, new financing, etc.). On the other hand, your company can also apply to the court for protection against your creditors in the framework of so-called judicial reorganistaion proceedings (gerechtelijke reorganisatie / réorganisation judicaire). In both situations, ESG considerations are likely to come into the picture because these measures require most of the time the support of the company’s existing shareholders or creditors but also the support of new investors, lenders or potential buyer(s) who exercise an increasing scrutiny on ESG factors.

Out-of-court restructuring measures

A debtor can amicably discuss restructuring measures with its creditors or with (new) investors or lenders. As financial market players themselves are increasingly the subject of stricter scrutiny (including on ESG issues), it is not uncommon to see these potential money providers imposing on the debtor ESG covenants in their loan agreements, in particular in respect of the “governance” and “environmental” part of ESG. In addition, ESG factors are becoming increasingly important for lenders and investors when assessing the overall prospects and stability of a business. Performing well on ESG criteria may therefore ease access to funding for distressed debtors. In addition, obtaining the support from all other relevant stakeholders as well (such as suppliers, employees and customers) will be equally important to successfully restructure the business. If the business’ ESG values are in line with those of the stakeholders, obtaining their necessary support may prove easier.

Judicial reorganisation proceedings

The purpose of judicial reorganisation proceedings is to preserve, under court supervision, the continuity of a company in distress or its activities. It grants protection against existing creditors by allowing the company either to negotiate an amicable settlement or a collective reorganisation plan or by providing for a transfer of the company’s activities to a third party.

The protection of judicial reorganisation proceedings can only be obtained if the continuity of the company is threatened in the short or medium term. In practice, the court will also examine whether the business or activities can effectively be rescued. The court may, however, only assess marginally whether there is such reasonable prospect of continuity. In other words, only if it is manifestly clear that the business or activities cannot be saved will the court dismiss the application to open judicial reorganisation proceedings.

ESG considerations may play a role in the assessment of the court and we expect that the importance of these considarations will only increase in the future. For example, if the business case of a company would be contrary to the values and objectives underling ESG criteria in such a way that it is excluded that the activities can be continued in a viable manner in the future (e.g., because the business model is not in line with the development of ESG regulation), the question can rise whether the court could (or should) not refuse the company access to the restructuring tool of judicial reorganisation proceedings. An example that comes to mind is a car manufacturer who refuses to invest in the development of an electrical or hydrogen based car division. Making sure that your business case is viable as seen from the perspective of ESG criteria (including the EU Taxonomy Regulation’s list of sustainable activities) will increase the chances your company could successfully apply for the opening of judicial reorganisation proceedings and benefit from the creditor protection that comes with is.

ESG considerations will also play a role throughout the course of judicial reorganisation proceedings. As discussed above new investors and in particular financial market players may impose strict ESG covenants as a condition to providing new financing. A potential buyer for all or part of the business is also likely to perform a due diligence with a focus on ESG compliance. In the event your company is already compliant on the ESG level (or actively working on getting there) that may facilite obtaining financing or transfering the activities to a third party.


Even though ESG issues are unlikely to play an all-decisive role in a business restructuring, there are nevertheless several ways in which they may impact the process or outcome. In particular, by making ESG issues a priority in your company, you may increase the likelihood of obtaining additional funding and necessary stakeholder support.

Jens De Winne - Senior Associate
Attorney at Law

Vanessa Marquette - Partner
Attorney at Law