In a recent contribution, Gillis Lindemans clarifies the treatment of incongruent legal acts—transactions that deviate from the debtor’s original legal position—under both current Belgian law and the forthcoming framework of the EU Insolvency Directive.
Under Article XX.111 of the Belgian Code of Economic Law, certain transactions performed during the suspect period remain vulnerable to avoidance, including:
- early payments;
- payments made in a form other than agreed; and
- new security interests granted for pre‑existing debts.
These acts are considered “incongruent” because their performance does not fully correspond to the creditor’s original claim. Yet, as the contribution notes, the boundaries of what qualifies as incongruent remain open to interpretation.
A particularly relevant example is the mortgage mandate—a widely used security technique in Belgian financing practice. While banks often rely on such mandates to limit upfront costs, the Belgian Court of Cassation has held that exercising a mandate during the suspect period may render the resulting mortgage unenforceable as a new security for an old debt. Case law and scholarship, however, reveal a minority view challenging this orthodoxy.
The Insolvency Directive underscores the importance of the distinction between congruent and incongruent coverage:
- According to Article 7(1), Member States shall ensure that detrimental preferences are unenforceable where they were perfected within the three months prior to the submission of the request that led to the opening of the insolvency proceedings, provided that the debtor was unable to pay its debts as they fell due in accordance with national law.
- Where a due claim of a creditor was satisfied or secured as owed (i.e. in the case of a congruent preference), Article 7(2) additionally requires that the relevant creditor knew of those circumstances at the time the preference was granted.
Importantly, the Directive’s preamble suggests that a security interest is incongruent only when it was “not agreed upon in the original debt agreement” (recital 11). This raises the question of whether a mortgage vested by exercising a mandate—explicitly agreed upon and provided for in the finance contract—could fall within the category of congruent preferences, thereby enjoying greater protection.
It remains to be seen whether the Belgian legislature will follow this interpretation when transposing the Directive, a process that must be completed by 22 January 2029.
