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Bertrand Géradin
Partner | Legal
Luxembourg Legal Services
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Bertrand Géradin
Partner
Luxembourg Legal Services
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Question | Answer |
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What are the principal insolvency procedures for Companies in your jurisdiction? |
Following the entry into force on 1 November 2023 of the law of 7 August 2023 on business preservation and modernisation of bankruptcy:
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Are any of the procedures available on a provisional basis? |
Moratorium applicable in the context of out-of-court reorganisation (réorganisation par accord amiable)
Please see below for more information on out-of-court reorganisation (réorganisation par accord amiable), judicial reorganisation (réorganisation judiciaire) and applicable moratorium |
What requirements must be satisfied for the procedures to be pursued? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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What is the procedure and how long does it typically take? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Can any procedures be pursued without the involvement of the Court? |
Out-of-court reorganisation (réorganisation par accord amiable)
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What is the effect upon control of the company and its assets during those procedures? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Is there an automatic moratorium and if so when does it come into effect and what is its effect? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Can companies be forcibly wound up other than when insolvent? |
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To what extent are the procedures designed to facilitate a rescue of a company’s business? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Can the procedures be used to facilitate the sale of all or part of the insolvent company’s business? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Question | Answer |
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To what extent do the courts in your jurisdiction lend assistance to overseas appointees (through recognition) and in what circumstances? |
Recognition of foreign insolvency proceedings
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Are there any limitations typically imposed in respect of the recognition of an overseas appointee? | As a general principle, foreign insolvency proceedings regularly opened in another state, which is not in the EU, are recognised directly without any specific formalities except to the extent such recognition would require local enforcement measures, in which case formal recognition (exeqatur) needs to be sought from the Luxembourg courts. |
What kinds of overseas appointees have been recognised in your jurisdiction? | See above. |
Do the courts in your jurisdiction assist in applications to subject a company incorporated in your jurisdiction becoming subject to an insolvency procedure in another jurisdiction? | Luxembourg courts would not assist in such applications. |
Question | Answer |
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What are the principle forms of security taken in your jurisdiction in respect of movable and immovable property? | Immovable property
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What is the effect on secured creditors of the commencement of an insolvency procedure? |
Bankruptcy (faillite)
Judicial reorganisation (réorganisation judiciaire)
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Which creditors are preferred and to what extent? |
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What is the position regarding the recoverability and quantum of liquidator’s fees and expenses of the insolvency procedure? | Insolvency receivers are entitled to a fee for their service corresponding to a certain percentage of the assets realised and dividends paid to the creditors. If the assets of the company are not sufficient to cover these fees, the Luxembourg State will bear them and the receiver will receive a fixed fee. |
Question | Answer |
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What if any categories of transaction can be avoided/set aside? |
Following contracts are automatically null and void if concluded during the hardening period (period suspecte) (ie. up to less than 6 months and 10 days before the judgment opening the insolvency proceeding):
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Who is responsible for seeking orders to set aside such transactions? | The insolvency receiver. Additionally, notwithstanding the time when they were made (including prior to the suspect period), any contracts or payments can be annulled by the insolvency court if they were made in fraud of the creditors’ rights. |
Question | Answer |
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Can directors or shareholders be required to contribute to the liquidation estate? |
Extension of a company’s bankruptcy to a manager
Debt contribution action
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What liability can directors or other officers attract in respect of an insolvent company? | Criminal liability: negligent bankruptcy (banqueroute simple)
Criminal liability: fraudulent bankruptcy (banqueroute frauduleuse)
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In what circumstances can directors be disqualified as a consequence of a company being wound up? | Legal and de facto managers of a bankrupt company who have committed serious offences or breaches of duty which have contributed to a company’s bankruptcy can be prohibited from carrying out any commercial activities or being appointed as a director, manager, statutory auditor, independent auditor or any similar position which includes the power to represent a company, for a period ranging from 1 to 20 years. This prohibition is automatically applicable to directors sentenced for negligent bankruptcy or fraudulent bankruptcy. |
Bertrand Géradin
Partner | Legal
Luxembourg Legal Services
Bertrand Géradin
Partner
Luxembourg Legal Services
David Al Mari
Counsel | Legal
Luxembourg Legal Services
David Al Mari
Counsel
Luxembourg Legal Services
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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