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.
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.
On 2 March 2016, the Luxembourg Court of Appeal has denied an appeal filed by Dr. Adil Elias, Faisal Islamic Bank of Egypt and a handful of other creditors of BCCI against a judgment previously rendered by the Luxembourg Commercial Court, which had refused to reopen the liquidation proceedings of Bank of Credit and Commerce International S.A. (“BCCI S.A.”) and BCCI Holdings (Luxembourg) S.A. (“BCCI Holdings”).
On 19 August 2016, the new law of 10 August 2016 on the modernization of the company law was published in Luxembourg's Official Journal (Mémorial A, n° 167) following its adoption by Parliament on 13 July 2016. The new law will enter into force 3 days following this publication date, i.e., on 23 August 2016.
The new rules will become immediatly applicable on August 23, although companies incorporated before that date will benefit from a 2-year grace period to amend their articles of association.
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: