Catering pre-insolvency restructurings for the needs of SMEs: Belgium (1850-1910)

Insolvency law and practice have not often been studied for its responsiveness towards differences in the corporate finance structure of firms. As a result, SMEs have not often been the focus of insolvency legislation. It remains to a large extent open for research as to what extent pre-insolvency proceedings, which are aimed at corporate rescue, should address the specific characteristics of SMEs. In this regard, the Belgian situation between 1850 and 1910 is most important. In 1851 and
1883, pre-insolvency proceedings were introduced that were aimed at continuity of business instead of liquidation. This proposal hypothesizes that this shift was due to a rise in numbers of SMEs, and to their features of financing (debt over equity, few financiers, closely held management). These properties made the existing insolvency proceedings (judicial and extrajudicial) unfit. It will be found out to what extent forensic practice, as well as commercial practice were addressing the specific problems of SMEs in financial distress. The proposed project will have a profound impact on debates regarding corporate insolvency, which often take generalizing stances. Differentiation according to the size of business ventures, and their respective qualities, is assumed to be as relevant today as it was in the past.