While there is a certain alignment between the proposed EU Directive on harmonisation of insolvency law and Luxembourg law, Luxembourg legislation will a priori need to be amended on several key points to be in line with the Proposal.

Preferences

Rules governing the avoidance of preferences (article 6 of the Proposal) find their equivalent in articles 445 and 446 of the Luxembourg Commercial Code.

Some marginal amendments are likely to be required, inter alia to reflect:

Introduced ten years ago as a response to the 2008 financial crisis, the bill of law on the preservation of undertakings and the modernisation of bankruptcy law (the “Bill of Law”) was finally adopted on 19 July 2023 after a long and eventful parliamentary process. Greatly inspired by Belgian law, it implements Directive (EU) 2019/1023 on restructuring and insolvency. Its main objective is to favour early restructuring and to avoid bankruptcy.

On 7 December 2022, the EU Commission issued a proposal for a directive harmonising certain aspects of insolvency law (the Draft Directive). One key aspect of this Draft Directive is the regulation of pre-pack proceedings.

In the absence of any currently existing pre-pack procedure, this means that such a procedure will ultimately need to be introduced in Luxembourg law. Furthermore, pre-pack sales may have a more immediate future through Luxembourg Bill No. 6539 A, which entirely revamps Luxembourg insolvency law and should be passed in the near future.