What numbers professionals have to do under the CEA

Recently, the tasks that the legislature gave to so-called “numbers professionals” in the Continuity of Enterprises Act (hereafter: CEA) have come into better focus. Firstly, a recommendation on the fleshing out of these tasks was approved by the High Council for the Economic Professions and, secondly, the Court of Appeal of Antwerp issued a relevant judgement on the subject.

The CEA offers traders, farmers and civil companies with a commercial purpose the possibility of fending off a bankruptcy via a judicial reorganisation. This judicial reorganisation can be either an amicable or judicial composition with the creditors or the transfer of all or a part of the company under judicial authority.

Within the procedures of the CEA, the legislature provides for two tasks for external auditors, external tax consultants, external certified bookkeepers, external bookkeeper-tax consultants and company auditors (hereafter collectively referred to as the "numbers professionals") of the companies. (Note carefully: the targeted numbers professionals aren’t identical for the two tasks.)

Firstly, numbers professionals must inform the company about weighty and consistent facts that can endanger the company´s continuity and which they identify in the course of performing their duties. If the company doesn’t take any steps within a period of one month in order to guarantee the company´s continuity for at least one year, the numbers professional can on his own initiative inform the Commercial Court about this situation, without thereby violating his duty of professional confidentiality. This is provided for in article 10, 5th paragraph of the CEA.

The judge can then gather information from the numbers professional about the recommendations that he made to the debtor and the steps that were taken (or not taken) in order to guarantee the company´s continuity. This can be found in article 12, 5th paragraph of the CEA.

In order to initiate a judicial reorganisation, the company must file a petition with the Commercial Court. And that is where the second task of the numbers professionals comes in. Firstly, a numbers professional must supervise the drafting of a statement of assets and liabilities and a profit and loss account and, secondly, the numbers professional must assist the company in preparing a budget with an estimate of the revenues and expenditures during the period of the requested suspension, both of which have to be joined to the petition.

Recent events have made these abstractly-described legal tasks a good deal more.  

First of all, on 16 March 2016 the High Council for the Economic Professions approved the inter-institutional recommendation of the IBR, the IAB and the BIBF, as mentioned above. This recommendation is intended as a guideline for fulfilment of the mission of the numbers professionals in the performance of the above-described tasks. The recommendation was jointly drafted by the professional institutions for numbers professionals, so that the different professional groups interpret these obligations uniformly. 

And secondly, the Court of Appeal of Antwerp on 8 September 2016 applied the principles in a case where it was asked to sentence the external bookkeeper of a bankrupt company to pay the invoices of one of the bankrupt company’s creditors, because the bookkeeper had failed to fulfil his obligations under article 10, 5th paragraph of the CEA and thus failed to inform both the company - which was already bankrupt at the time the claim was filed - and the Commercial Court of facts that might endanger the company´s continuity (and which obviously - in light of the subsequent bankruptcy - actually did so).    

The Court dismissed this claim in its entirety. Firstly, the creditor failed to demonstrate that the bookkeeper had in fact acquired knowledge about "weighty and consistent facts" that would trigger the reporting duty. The Court also found that the law does not impose on the numbers professional a duty to conduct a systematic and organised investigation in order to constantly monitor the company´s continuity. If the numbers professional knows that the company – the bookkeeper’s client – is informed of its own precarious condition and has taken appropriate steps, it is not necessary that the numbers professional report his own findings to the company. Finally, it is only an optional possibility for the numbers professional to inform the Commercial Court, by no means an obligation, so the fact of not having informed the court cannot constitute a fault on the part of the bookkeeper. Moreover, the external bookkeeper isn´t even included on the list of art. 10, 5th paragraph CEA with regard to reporting to the Commercial Court.

These two developments create a framework for the potential liability of the numbers professional, that can be relevant both for companies in difficulties and for the creditors of such companies.   

For more information on this topic, you can consult Sophie Deckers, Dave Mertens (authors) and Gwen Bevers (unit head).