Judicial reorganization – Accounting review – Annexes to the petition


In order to secure the protection of judicial reorganization, the debtor needs to attach to the petition for judicial reorganization a certain number of documents provided for in article 17 § 2 of the Law on the continuity of enterprises (LCE). If these documents are not attached to the petition, the LCE provides that the petition shall be deemed inadmissible.

These documents include "a balance sheet and profit and loss statement dating back no more than three months". The law of 27 May 2013 amended this article by making the intervention of an auditor or certified accountant mandatory. The remit of such a professional involves limited control and an analytical review of the accounting situation. The aim of this control and review is to assure affected third parties that the financial data does not show any significant inconsistency and/or obvious overvaluation. The professional accountant therefore needs to examine to a limited extent whether the accounting situation reflects the facts.

Court and tribunal applications

Recently, in November 2014, the Mons Court of Appeal judged inadmissible the demand to obtain the opening of judicial reorganization proceedings because the auditor's report did not, according to the Court, comply with article 17 of the LCE].

According to the Court of Appeal, if the auditor or the certified accountant does not need to perform a full scope audit and certify the accounts and forecasts of the debtor, they should, nevertheless, exercise limited control and not just take note of the data given by the debtor.

In casu, the auditor's report clearly stated that the assistance and supervision of the auditor in the accounting situation of the company facing financial difficulties could not be considered as control.

The Court considered that even if it's legitimate for the auditor to express reservation in regard to the extent of his intervention, nevertheless it is the auditor's duty to exercise limited control of the accounting situation and to give his advice on whether or not the forecasts can be deemed reasonable.

Concretely, the reviews of the auditors and certified accountants need to specify, on the one hand, that there is no significant inconsistency in the accounting results in question or obvious overvaluation of the net assets, and, on the other hand, that the forecasts are reasonable. If these points are not expressly mentioned in the review, the review should at least not contain any contrary claims.

In conclusion, particular attention should therefore be paid to the form of the auditors' and certified accountants' reviews.