Introduction
Preventive measures
Out-of-court reorganisation
In-court reorganisation
Modernisation of bankruptcy
On 19 July 2023, the Luxembourg parliament passed bill no. 6539A on business preservation and modernisation of bankruptcy law, which aims to modernise Luxembourg’s insolvency laws, implementing EU Directive 2019/1023 of the European Parliament and the Council of 20 June 2019 on preventive restructuring frameworks (the 'Business Preservation and Insolvency Modernisation Act' or 'BPIM Act').
The Luxembourg act of 28 October 2022 introducing the procedure of administrative dissolution without liquidation (procédure de dissolution administrative sans liquidation, the "Administrative Dissolution Procedure") (the "Act") has just been published and will enter into force on 1st February 2023.
Background and objective
The purpose of the Act is to dissolve empty shell companies within a short timeframe at reduced costs for the Luxembourg State.
The Act of 17 December 2021 has extended the transitional measures provided for by the Act of 23 September 2020 until 31 December 2022. In practice, Luxembourg-based companies can hold either virtual board and shareholder meetings, even if their articles of association provide otherwise, or physical meetings if they respect the applicable sanitary conditions.
The Act of 30 June 2021 has extended the possibility for Luxembourg-based companies to hold virtual board and shareholder meetings until 31 December 2021.
Table of contents
Bankruptcy .............................................................................. 2
Controlled management .......................................................... 2
Moratorium or suspension of payments .................................. 3
Company voluntary arrangement ............................................ 3
Involuntary liquidation.............................................................. 3
Contacts .................................................................................. 4
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:
“[C]ourts may account for hypothetical preference actions within a hypothetical [C]hapter 7 liquidation” to hold a defendant bank (“Bank”) liable for a payment it received within 90 days of a debtor’s bankruptcy, held the U.S. Court of Appeals for the Ninth Circuit on March 7, 2017.In re Tenderloin Health, 2017 U.S. App. LEXIS 4008, *4 (9th Cir. March 7, 2017).
The Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”) require each corporate party in an adversary proceeding (i.e., a bankruptcy court suit) to file a statement identifying the holders of “10% or more” of the party’s equity interests. Fed. R. Bankr. P. 7007.1(a). Bankruptcy Judge Martin Glenn, relying on another local Bankruptcy Rule (Bankr. S.D.N.Y. R.