Going bankrupt mid-procedure? Then your damages claim has to be on the table from day one — wait, and you lose everything
The Council of State dismisses the appeal of the bankrupt company Belgaze against its non-selection and the award of a VMW framework agreement: because Belgaze had not filed a damages claim under article 11bis with or during its annulment action, its standing to sue evaporated when bankruptcy was declared.
What happened?
The Flemish water company VMW had set up a qualification system for distribution-pipe works and in July 2015 — through a restricted procedure in the special sectors — launched a framework agreement for major extension and adaptation works in East-Flanders. Belgaze, qualified since June 2015, submitted a bid. On 4 September 2015 VMW asked Belgaze to prove that — despite tax debts above € 3,000 — it fell within the exception of article 68 § 2 third paragraph of the special-sectors royal decree. Belgaze answered on 11 September. The award report of 15 September concluded that it could not be selected. On 25 September 2015 VMW did not select Belgaze and awarded the contract to a joint venture (Canalco / Baert & Sons / Verbraeken / Etwal). Belgaze filed an annulment action on 26 November 2015. Two years later, on 23 October 2017, Belgaze was declared bankrupt by the commercial court of Ghent, Dendermonde division. The trustee resumed the proceedings and pointed to an asset of the estate: damages flowing from a possible illegality. The auditor found: a bankrupt bidder cannot perform the contract, sits in an exclusion ground, and the creditors' interest is too indirect. As to the 'qualified moral interest' a losing bidder normally has in annulment as such, the trustee did not show how this applies to a bankrupt company. And as to damages: article 11bis of the Council of State Acts and article 25/1 of the Regent's decree allow only three moments for filing such a claim — together with the appeal, during the proceedings, or within sixty days after a judgment finding illegality. Belgaze had done none of these, and no illegality finding would be made because the appeal would be dismissed for lack of interest. Mere future intent to file a damages claim is not enough to keep standing alive. Appeal dismissed. The estate ordered to pay € 400 court fee and € 700 procedural indemnity.
Why does this matter?
For bidders who launch proceedings against an award this is a double warning. One: Council of State proceedings often take years, and a lot can happen in those years. If your company goes bankrupt between filing and judgment, you lose your present interest — a bankrupt firm cannot perform the contract anyway and sits in an exclusion ground. Two, the real lesson: if you also want damages, you must claim them at once, or at least during the proceedings. You cannot wait for an annulment judgment and only then file a damages claim — if your appeal is dismissed for lack of interest, you never get the illegality finding that triggers the sixty-day window of article 11bis. You then lose both annulment and damages. For trustees who take over a pending Council of State case: the article-11bis claim has to be filed now, not later.
The lesson
If you are filing an annulment action and your finances are fragile, attach a damages claim under article 11bis from day one. Do it together with the action, or at the very least during the proceedings. Don't wait for the judgment. If your company goes bankrupt mid-proceedings and you have not filed a damages claim, it's too late: a dismissal for lack of interest yields no illegality finding, and without that finding the sixty-day window does not start. The estate then loses a potential claim that may have been worth more than the entire proceedings.
Ask yourself
When you are preparing an annulment action against an award today: did you include a damages claim under article 11bis in the same writ? If not — how financially robust is the company, and how high is the bankruptcy risk during typical proceedings of 2-3 years?
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →