Luxembourg’s modernisation of the Companies Act of 1915 was formally adopted on 13 July 2016, and includes changes to company liquidation, incorporation and capital increase procedures.
Three-step liquidation
Thanks to the Act of 10 August 2016 modernizing Luxembourg company law, which entered into force on 23 August 2016 (the “New Act”), the Grand Duchy now officially recognizes the possibility for companies to be wound up by means of a simplified procedure. This is unquestionably a useful tool which will further enhance Luxembourg's business-friendly reputation.
Under the Act of August 10 2016 modernising the Company Law 1915 (which entered into force on August 23 2016) Luxembourg law now officially recognises that companies can be wound up by means of a simplified procedure. This is an unquestionably useful tool which will further enhance Luxembourg's business-friendly reputation.
Introduction
Luxembourg recently adopted a number of legislative reforms aimed at modernising the rules applicable to commercial companies. In relation to the restructuring and insolvency of Luxembourg-based entities, Parliament is discussing the long-awaited Bill 6539 (the so-called 'Insolvency Bill').
In the meantime, a number of reforms which could affect the restructuring and insolvency of commercial companies have been adopted, including:
On 25 April 2018 the Court of Appeal ruled on the loss of credit capacity in the context of bankruptcy. The case involved a company that intended to resist a creditor's application for bankruptcy on the basis that it had not lost its credit capacity, as it could prove that the funds needed to settle its debt were available in its lawyer's third-party account. Therefore, the court had to verify whether there was a loss of credit capacity, which is necessary to declare bankruptcy.
On 16 May 2018 the Court of Appeal ruled on the enforcement process for a share pledge realised via the sale of shares in a Luxembourg company by the pledgee in a private transaction for a symbolic price, where the pledgor (a Luxembourg company) was subject to insolvency proceedings.
The Court of Appeal's decision covered the following points.
On 20 November 2018 the Luxembourg District Court ruled on the liability of a liquidator and a liquidation auditor in the event of a voluntary liquidation.
On 30 May 2013 a company's extraordinary general shareholders' meeting agreed to put the company into voluntary liquidation by appointing a liquidator and a liquidation auditor. The liquidation closed on 20 October 2014.
La Cour d'appel de Luxembourg décide que le jugement de clôture de faillite pour insuffisance d'actifs ne met pas un terme aux opérations de faillite, mais en suspend les opérations.
La survie d'une société au terme des opérations de faillite diffère selon l'actif récupéré par le curateur.
Les sociétés commerciales dont les opérations sont clôturées pour insuffisance d'actif restent inscrites au registre de commerce.
According to the Court of Appeal, instead of entirely putting an end to bankruptcy operations, the decision to close the bankruptcy case only "suspends the bankruptcy process", while restoring individual rights to creditors. The appeal judges further indicated that "the bankruptcy regime stops existing, but the debtor remains under the threat of the re-opening of bankruptcy operations, which virtually survive".
Hellas case: The Luxembourg Commercial Court rejects the English liquidators’ one billion EUR claim
In a well motivated judgment rendered on 23 December 2015, the Luxembourg Commercial Court has ruled in favor of the former private equity owners of Hellas Group, i.e.ultimately Apax Partners and TPG Capital, and dismissed the action of the English liquidators of Hellas Telecommunications II SCA (Hellas II) for reimbursement or damages of 973 million EUR.