Bankruptcy Law in Luxembourg
Bankruptcy Law in LuxembourgUpdated on Tuesday 21st March 2017
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Luxembourg has set in place various legal frameworks which covered companies in financial difficulties. The first Bankruptcy Law which was enabled by the Grand Duchy in 1886. Ever since, the governments running the country over time have tried to improve the law and the regulations which would keep Luxembourg companies afloat before declaring bankrupt and commencing liquidation procedures. The newest Luxembourg Bankruptcy Law was created in 2013 and was incorporated in the Grand Duchy’s Commercial Code.
Our attorneys in Luxembourg can offer information on the current procedures a company may follow in order to avoid bankruptcy.
What does the new Luxembourg Bankruptcy Law provide for?
Law No. 6539 on Business Preservation and Modernization of Bankruptcy Law, as it was called, was meant to delay as much as possible the dissolution of a company in financial distress. The new bankruptcy legislation is made up of four parts which aim for the prevention of bankruptcy rather than covering the actual process. These parts are:
- - the preventive part which allows companies to address their problems in their early stages;
- - the restorative parts which will enable a company to continue doing business;
- - the repressive part which is meant to verify a company thoroughly in order to make sure the shareholders will not declare bankruptcy in order to not pay their creditors;
- - the social part which focuses more preserving jobs and employees’ rights.
Our lawyers in Luxembourg can offer more information the new Bankruptcy Law and its content.
Luxembourg companies declaring bankruptcy
When a company has reached the point in which it can no longer pay its debts, even after having undergone restructuring, it may begin the bankruptcy procedures. According to the law, the company can file a bankruptcy petition with a court of law which will appoint a trustee to oversee the proceedings. The trustees are usually Luxembourg lawyers and will be in charge with liquidating the debtor’s assets in order to pay the creditors.
For assistance in bankruptcy or reorganization procedures, do not hesitate to ask for legal advice from our law firm in Luxembourg. You can also ask us for more information on the Bankruptcy Law in Luxembourg.