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03 September 2021 / news

Luxembourg’s newest creditor-friendly tool ‘professional payment guarantee’ (PPG)

Luxembourg’s newest creditor-friendly tool 'professional payment guarantee’ (PPG) has been assessed. The PPG undoubtedly reinforces the legal certainty of the Luxembourg independent guarantees and grants it long-awaited statutory recognition. However, its contractual flexibility and bankruptcy remoteness should make it a frequently used tool, but it seems its attractiveness for creditors has not yet been noticed internationally.

Professional payment guarantee - Business Meeting

The PPG was intended to compensate for the shortfalls of suretyships and lack of statutory authority for the independent/first demand guarantees, creating a credit-friendly tool complementing well-known Luxembourg financial collateral arrangements. Unfortunately, it appears that the PPG is still rarely used in both national and international transactions. A true let-down for the Luxembourg government.

In this article published by Legal 500 in their In-House Lawyer magazine Summer 2021 edition, our authors re-assess the use of this tool in the current context (Brexit, COVID…) and its benefits for national and international markets.

More particularly, the key points addressed are the following:

  • The current situation of the new tool;
  • Its benefits and impact on the legal certainty;
  • The national and international market conditions;
  • Experts’ vision about the future.

To read the full article click here.

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