How would you describe the current restructuring and insolvency landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
Rescue proceedings in Luxembourg are not extensively used, as they are considered to be too formal, costly and burdensome. However, since 2018 there has been a substantial increase in major international debt restructurings in Luxembourg and we anticipate this trend to continue. Many of these restructurings which do not survive the consensual route end up in foreign restructuring proceedings, even though the Luxembourg holding or bond issuing entities are often key to the group.
In recognition of this situation, on 1 February 2013 the government filed draft Bill 6539 on the preservation of business and the modernisation of the bankruptcy law. The draft bill includes various preventive, repressive, restorative and social provisions which aim to reduce, or at least stabilise, the number of bankruptcies in Luxembourg. However, the draft bill was heavily criticised by the Council of State as lacking efficient processes, providing for complex procedures and imposing new duties on court officers; questions were also raised regarding its feasibility and practicability.
The bill is currently being redrafted, but there seems to be little political will to update the current restructuring landscape in Luxembourg.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
First published in Mondaq