The Insolvency Review - 6th Edition - Luxembourg Chapter

I INSOLVENCY LAW, POLICY AND PROCEDURE

i Statutory framework and substantive law

Insolvency proceedings in Luxembourg are governed by the following legislation.

General insolvency regime

the Law of 14 April 1886 on composition with creditors, as amended; the Grand Ducal Regulation of 24 May 1935 on controlled management; the Code of Commerce, which deals more specifically with stays of payments and bankruptcy proceedings; and Council Regulation (EC) No. 848/2015 of 20 May 2015 on insolvency proceedings.2 Main special insolvency regimes

Banks and professionals of the financial sector: Law of 18 December 2015 on resolution, recovery and liquidation measures of credit institutions and some investment firms, on deposit guarantee schemes and indemnification of investors. Insurance and reinsurance companies and pension funds: Law of 6 December 1991 on the insurance sector, as amended. Regulated investment funds and fund managers: Law of 17 December 2010 relating to undertakings for collective investment (UCIs), as amended; Law of 13 February 2007 on specialised investment funds, as amended; Law of 15 June 2004 on the SICAR, as amended; Law of 23 July 2016 on reserved alternative investment funds (RAIF); and Law of 12 July 2013 on alternative investment fund managers. Regulated securitisation entities: Law of 22 March 2004 on securitisation, as amended. The insolvency procedures provided for under Luxembourg law may be divided into those intended to preserve the business of the debtor (i.e., stay of payments, controlled management and composition with creditors) and procedures intended to wind up and realise the assets of the debtor (i.e., bankruptcy and compulsory liquidation).3

Each procedure will be further analysed under Sections I.iii and Each procedure will be further analysed under Sections I.iii and III.vi, along with the substantive provisions of Luxembourg insolvency law relating thereto.

ii Policy

While Luxembourg insolvency law boasts three specific reorganisation procedures, which are essentially designed to keep failing businesses operating and to facilitate their restructuring into proper going concerns, there have been few cases of such procedures being opened in practice. For instance, there was a total of slightly over 100 cases of controlled management over the past 25 years, roughly half of which ended up in formal bankruptcy proceedings.4 Neither have there been any cases of composition with creditors nor of stays of payments...