Restructuring & Insolvency Q&A: tips and traps
The restructuring & insolvency Q&A series provides a comprehensive overview of some of the key points of law and practice of the regulatory environment in Luxembourg. Today's chapter focuses on tips and traps.
What are your top tips for a smooth restructuring and what potential sticking points would you highlight?
Where Luxembourg holding or bond issuing companies are key to a distressed group, the following points are often misunderstood or considered too late, thus jeopardising a smooth restructuring;
- the particularities of the conservative and cumulative insolvency test;
- the lack of availability of efficient in-court recovery proceedings and out-of-court tools;
- the fact that Luxembourg bankruptcy proceedings are aimed at liquidation and give shareholders and creditors no control or influence over the process;
- the statutory timeframe within which to file for bankruptcy once the criteria are met, which may lead to directors’ civil and criminal liability; and
- the fact that bankruptcy will not stop the holder of security assets falling under the Collateral Law from quickly and efficiently enforcing its security, but that such enforcement will not be very useful if the underlying company is first declared bankrupt.
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
Anne-Marie NicolasPartner Attorney at Law / Avocat à la Cour
Anne-Marie Nicolas, partner, is a member of the Banking & Finance Practice Group in our Luxembourg office. She co-heads the Luxembourg Restructuring Team. Anne-Marie focuses on secured lending, including acquisition finance and real estate finance, as well as debt restructuring.T: +352 466 230 314 E: [email protected]
Richard SteichenAssociate Attorney at law / Avocat à la Cour
Richard Steichen, associate, is a member of the Banking & Finance Practice Group in our Luxembourg office and a member of the Restructuring Team. He focuses on secured lending and financial restructurings.T: +352 466 230 492 E: [email protected]