Insolvency proceedings in Luxembourg
What are the insolvency proceedings in Luxembourg?
Insolvency proceedings in Luxembourg include controlled management (“gestion controlee”), suspension of payments (“sursis de paiement”), composition with creditors (“concordat préventif de faillite”), and procedures intended to realise the assets of the debtor and to discharge the liabilities: bankruptcy and compulsory liquidation.
Bankruptcy is the most common type of insolvency proceeding in Luxembourg. A commercial company is considered bankrupt if (1) it can no longer pay its debts as they fall due; and if (2) it may no longer raise credit. These two conditions must be met cumulatively.
What do I have to do, facing insolvency proceedings in Luxembourg?
Companies that meet the bankruptcy criteria set out above must file for bankruptcy within one month of the cessation of payments. Failure to do so will create a liability exposure for the directors.
After the filing for bankruptcy, the bankruptcy will be declared by a judgment of the District Court (Tribunal d’Arrondissement).
As of this judgment, the members of the board of directors of the company will be discharged from their duties and replaced by one or more court-appointed receivers, which shall administer and realise the debtor’s assets and then distribute the proceeds to the creditors (in principle according to the priority order provided for by law).
All debts not yet payable, will become payable. All enforcement actions carried out by unsecured creditors are suspended. Agreements entered into by the debtor are not automatically terminated.Contacter LG AVOCATS