Legal Culture, Path Dependence and Dysfunctional Layering in Belgian Corporate Insolvency Law

The history of Belgian corporate insolvency law demonstrates the lasting effect and the replication of implicit legal–economic conceptions. Even though, since the middle of the 19th century, pre‐insolvency proceedings were made available in Belgium, the effectiveness of these proceedings was limited. This was due to the dysfunctional juxtaposing of proceedings and the reluctance of the legislator to change earlier approaches. Closely related thereto was the lack of impact assessments preceding legal reforms and the continuation of ideas regarding the restrained powers of courts and preferential treatment of secured creditors. Debates in Parliament turned around principles, not around the effect or harmonisation of laws. Members of Parliament typically had had legal training; economic analyses were largely absent. In the course of the 20th century, new ideas on broader intervention by judges were put down in draft bills, but only a small portion of them made it to become legislation. The 1997 law on restructuring proceedings went farthest in granting competences to the commercial court for assessing the feasibility of reorganisation schemes, but this was readjusted in 2009. As a result, judicial restraint is still present, and the rights of secured creditors are considered paramount, this in spite of contrary foreign examples. Strong path dependence in Belgian corporate insolvency law is the result of prevailing beliefs and cannot be attributed to lobbying efforts or deliberate choice.