Insolvency Law in Luxembourg
Insolvency Law in LuxembourgUpdated on Friday 14th December 2018
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Luxembourg is mainly known for the investment fund industry which is one of the most prolific sectors of the economy. However, during the last several years other industries, such as financial technology and innovation have also started developing which is why the government has set in place new insolvency proceedings in order to help companies not to shut down, but to try and recover before appealing to such drastic measures. The Insolvency Law of Luxembourg was last amended in 2015.
Our attorneys in Luxembourg can offer information on the latest amendments brought to the Grand Duchy’s law on insolvency.
The new Luxembourg Insolvency Law
The latest changes of 2015, provide for insolvency proceedings targeted based on the type of the structure filing for bankruptcy. These are:
- - insolvency procedures for private limited liability companies;
- - insolvency procedures for public companies;
- - insolvency procedures for partnerships limited by shares.
These changes in the Insolvency Law had the purpose of enhanced protection of professional investors establishing investment funds in Luxembourg. Several provisions of the old insolvency legislation were also kept and these refer to the nature of the debt. Under the Luxembourg Civil Law, a creditor is allowed to chase unpaid amounts of money based on the nature of the debt. For this purpose, the creditor may file a petition with a court for the immovable assets of a company to be executed during the insolvency procedures in Luxembourg.
Types of insolvency procedures in Luxembourg
The Insolvency Law in Luxembourg provides for two types of proceedings:
- - bankruptcy;
- - financial reorganization or restructuring.
While bankruptcy procedures fall under the provisions of the Commercial Law, financial reorganization are regulated by specific regulations. It should be noted that the latter are seldom used in Luxembourg because they must be requested by the debtor. In the case of bankruptcy, procedures can be initiated by the creditors, by the debtor or even by a Luxembourg court of justice.
For full information on the insolvency legislation and proceedings related to it, please contact our Luxembourg lawyers. We can also assist with legal assistance in insolvency or bankruptcy procedures.