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 Act of 30 June 2021 has extended the possibility for Luxembourg-based companies to hold virtual board and shareholder meetings until 31 December 2021.
Given the present coronavirus outbreak, it is of the utmost importance for lenders and borrowers alike to diagnose correctly the risks and challenges ahead for their business. Indeed, the present crisis is not merely about liquidity but much more about solvency as it will affect the real economy first.
With the spread of the virus, there is an acute risk of financial difficulties leading to default and bankruptcies in sectors most vulnerable to the virus, including maritime and air transport, retail, tourism, insurance and entertainment.
Table of contents
Bankruptcy .............................................................................. 2
Controlled management .......................................................... 2
Moratorium or suspension of payments .................................. 3
Company voluntary arrangement ............................................ 3
Involuntary liquidation.............................................................. 3
Contacts .................................................................................. 4
The government's response to the recent Insolvency and Corporate Governance Consultation has increased the emphasis on flexibility and the restructure and rescue of businesses. However, along with the recent October Budget, there are proposed reforms which are set to increase the focus and accountability for directors of companies.
Preliminary Moratorium
One of the key new proposals to be introduced with the aim of rescuing companies is a "Preliminary Moratorium".
The Dutch Supreme Court has confirmed the decision of the Amsterdam Court of Appeal, which found that the bankruptcy of the Russian based oil company, Yukos, could not be recognised in the Netherlands because it violates Dutch public policy.
The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.
The Australian Federal Court has clarified the limitations for foreign entities and their office holders in pursuing action in Australia to access the voidable transaction provisions of the Australian Corporations Act.
In August 2018 we reported on the TCC decision of Fraser J in the case of Michael J. Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (in Liquidation) [2018] EWHC 2043. See our previous article here. Following an appeal by Bresco, the case has recently been heard by the Court of Appeal.
TCC decision
Control to Serbian Creditors- the amendments to the Serbian Insolvency Act
The recent amendments to the Serbian Insolvency Act enacted 9 December 2018 have placed more control into creditors’ hands allowing them to suggest the insolvency administrator to be appointed, as well as providing less restrictive provisions on the proposers of reorganisation proposals.