Domestic Procedures
In this article, partner Bertrand Géradin and managing associate David Al Mari from Ogier’s Restructuring and Insolvency team in Luxembourg provide a high level summary of the enforcement mechanisms related to share pledges in Luxembourg. This article first appeared in Chambers Expert Focus Guides.
Introduction
Non-consensual third-party releases are provisions in reorganization plans that release non-debtor parties from liability to other non-debtor parties without the consent of all potential claimholders. These releases are frequently included in chapter 11 plans of reorganization. Most circuit courts allow these releases under certain circumstances; however, there is a split among circuit courts as to whether such non-consensual third-party releases are permitted by the Bankruptcy Code.
Introduction
Usual Luxembourg security package
Luxembourg is one of the leading domiciles worldwide for international investment portfolio acquisition vehicles.
Acquisition financing are usually secured against the assets and cash flows of the target company as well as of the buyout vehicle.
In practice, given that a Luxembourg holding company generally does not have any operational activities, shares, receivables and cash on bank are the most important assets to cover.
Background
Luxembourg went into full Coronavirus lockdown on March 16. By the ministerial decree of 16 March 2020, the State narrowed down the movement of citizens to the essential activities (notably the procurement of food, medication and basic necessities and travel to health facilities) and has ordered to limit business activities and allow people to stay at home. For workers engaged in other (non) commercial activities, the state recommends using home office and reducing activities to tasks that are essential for the operation of the business.
In light of the COVID-19 crisis, a Grand Ducal Regulation was published on 25 March 2020 (the Regulation)[1] that suspends certain procedural deadlines applicable in civil and commercial matters during the Luxembourg state of crisis. The Ministry of Justice has clarified that this suspension also relates to insolvency matters.