Key takeaways from the Decision

In this case, argued by Loyens & Loeff, the Court of Appeal confirmed that Article 10 may be applied where serious governance failures, repeated breaches of Luxembourg company law, significant financial distress and persistent dysfunctions threaten the continuity of the business. The Court therefore upheld the continued appointment of the judicial agent, successfully obtained by Loyens & Loeff in first instance.

The Court further held that:

  • the powers that may be entrusted to a judicial agent may include, inter alia, information-gathering measures, audits, conciliation efforts, participation in judicial proceedings, the chairing of the company’s governing bodies and veto rights over decisions of the latter. The Court emphasised that this list is not exhaustive and that a judicial agent may therefore being entrusted with taking any action, including the initiation of legal proceedings, against management decisions that may be abusive, unlawful or contrary to the interests of the company. Such a mandate remains necessary and proportionate even where proceedings brought on behalf of the company may need to be pursued outside of Luxembourg;
  • the judicial agent’s mandate may be extended by requiring them to oversee the preparation and publication of outstanding financial statements and to assess whether judicial or extrajudicial restructuring measures should be pursued;
  • in a group context, where a judicial agent is granted prior approval rights over transactions involving assets held by subsidiaries or sub-subsidiaries, those powers operate through the Luxembourg parent company’s exercise of its shareholder and governance rights, rather than through any direct intervention in the management of those entities. The judicial agent may therefore supervise and control the way the parent company exercises its rights within the group;
  • Article 10 empowers the Court to take protective measures where circumstances so require, while clarifying that such powers do not extend to the appointment of a provisional administrator capable of fully replacing the company's management bodies.

Why this matters

The Decision therefore confirms that creditors and other interested parties may rely on Article 10 to seek effective governance measures before formal insolvency proceedings become necessary. At the same time, it establishes that such measures must remain proportionate and cannot result in the complete displacement of management.

The Decision also provides valuable guidance for international corporate groups by confirming that Article 10 may indirectly affect group-wide decision-making through the Luxembourg parent company.

Conclusion

The Court of Appeal’s decision of 22 May 2026 marks a significant milestone in the interpretation of Article 10 of the Restructuring Law. It confirms that Article 10 is a powerful pre-insolvency governance tool capable of supporting far-reaching and tailor-made judicial intervention, where serious misconduct such as persistent governance failures threatens the continuity of the business, without displacing management.