Many Belgian business families use P.O. box companies in Luxembourg, but now the Antwerp court has declared such a Luxembourg ‘multi-billion P.O. box’ bankrupt. “This could lead to a clash with Luxembourg“, some say. “A dangerous precedent for many companies.“
The richest 100 families in Belgium alone have together parked more than 48 billion euros at more than 160 P.O. Box companies in the Grand Duchy of Luxembourg. De Tijd unveiled this in March 2018. Of the richest 50 business families in Belgium, eight out of ten have financial and fiscal arrangements in Luxembourg. More than half of the families only used a PO Box address for this purpose.
One of the most important PO Box addresses in Luxembourg can be found on Boulevard Prince Henri. The number 9B is home to the Luxembourg accountant Fons Mangen. Belgium’s richest diamond family Mehta, among others, uses that Luxembourg address for its global holding company, Eurostar Diamonds International. The Luxembourg holding company above Carglass-owned Belron, owned by the Belgian group D’Ieteren, also uses that house number. Other Belgian business families already used this P.O. box, such as the Beaulieu family De Clerck and the Belgian families behind AB Inbev. The de Spoelberch family, one of the richest families in Belgium, still has some holdings there.
Two years ago, when journalists visited this ‘multimillion-dollar mailbox‘, there was little more to be found than a row of gilded nameplates next door, with a dozen rickety mailboxes in the entrance hall, one of which was wide open and empty. All the mailboxes referred to the third floor where the Luxembourg advisor was located.
The journalists did not get any further than the entrance hall, but a remarkable ruling by the Antwerp Corporate Court now punctures the ‘international holding company‘ that the Antwerp diamond family Mehta has at that Luxembourg address. On Thursday, the Antwerp court declared Eurostar Diamonds International, Luxembourg, bankrupt. The judgment states what the provisional administrator, the Antwerp lawyer Nick Peeters, found when he was able to open the entrance door on Boulevard Prince Henri, 9B.
The ‘international headquarters‘ of the large diamond group turned out to be an office of 20 m², where ‘the cupboards were empty‘. The PC with keyboard and printer were not connected’ and ‘the documentation that was there was for the financial year 2013‘. The Luxembourg address was just a front. In reality, the group was managed from Antwerp. That’s where the directors lived, the meetings took place and the computer servers for the entire group were in Antwerp. All invoices, directors’ fees and capital increases were also waiting to be paid from Antwerp. ‘Incoming phone calls were transferred to the Belgian telephone number‘, ‘the mail was taken to Belgium by Eurostar employees‘ and ‘the important correspondence was scanned by Fons Mangen (the Luxembourg accountant, ed.) and forwarded to the directors in Antwerp‘.
The Antwerp court ruled that Eurostar Diamonds has its head office on paper in the Grand Duchy, but that it is ‘almost exclusively a place of receipt of letters‘. The judgment states that ‘the fact that there was an external accountant and an auditor or that one account had been opened with a Luxembourg bank does not prove that Eurostar’s ‘centre of main interests’ would be in Luxembourg‘.
The three Antwerp judges who had to rule on the case believed that the real nerve centre of the diamond group was in Antwerp. That is why the Belgian judges decide that, based on European rules, they are ‘internationally competent‘ to judge the fate of the Grand Duchy holding company and can declare it bankrupt from our country. ‘The real situation takes precedence over the purely formal situation‘, it reads.
The lawyer of the diamond group, Youri Steverlynck, calls the verdict ‘dangerous justice‘ and appeals. ‘This creates great legal uncertainty for internationally structured companies. What is a P.O. Box? Look how Luxembourg is organized: most holding companies have a limited infrastructure there. Are all of them suddenly no longer Luxembourg companies? This really is a special judgment. That’s not what the European insolvency rules are for’.
Steverlynck is expecting a clash with the Grand Duchy. In Luxembourg, this bankruptcy would never have happened, because the rules are different. Luxembourg already refused to publish the appointment of the Belgian provisional administrator in this case, because it did not exist under the Grand Duchy law. What are they going to do now with this judgement, which declares a Luxembourg company bankrupt from Antwerp’?