Snippet series

What is the impact on the double Luxco and the Luxembourg share pledges?

Luxembourg bolsters its position for the structurings of international investments with the introduction of new tools for bankruptcy prevention. The existing and new financial collateral arrangements maintain their bankruptcy insolvency proceedings remote status, preserving the benefit and popularity of the double Luxco structure and the related enforcement of Luxembourg share security.

The effects of Brexit have had seismic consequences for all aspects of law, not just in the UK but in Europe more widely. This month we hear from four Loyens & Loeff team members specialising in insolvency and restructuring matters, who take a look at the corporate insolvency fallout for Luxembourg specifically. How have Schemes and restructuring plans been impacted by the UK’s exit from the EU, and what has it meant for enforceability of judgements?

This article deals with the insolvency concept of the center of main interests (COMI) under the European Union insolvency legislation, in particular Regulation 2015/848 on insolvency proceedings (the Insolvency Regulation or the Regulation).

Pursuant to the Insolvency Regulation COMI is one of the central unified and autonomous concepts¹ of the insolvent debtor, i.e. it is an insolvency concept and not a corporate law or tax concept.

In ordinary business circumstances, the directors/managers of a Luxembourg company have a duty to file for bankruptcy within one month of the meeting of the two criteria for bankruptcy (under threat of criminal sanction) – this is the so called “Insolvency Filing Obligation”. The two parts of the test for bankruptcy are: (i) cessation of payments (or so called missed creditor payment) and (ii) loss of creditworthiness.