LIECHTENSTEIN Trends and Developments Contributed by: Christoph Bruckschweiger, Benedikt König, Philipp Benda and Magdalena Marxer-Friedrich, paragraph 7
the Project Company, which is unable to fulfil its obli- gations to the issuer, thereby rendering the issuer itself unable to meet its payment commitments. For the issuer, the primary objective is to avoid litiga- tion, as failure to do so could expose them to claims potentially amounting to millions, which may be unsustainable and could inevitably trigger insolvency proceedings. Accordingly, the issuer must carefully manage all correspondence with investors. In this context, the provisions of Liechtenstein’s Per- sons and Companies Act regarding bondholders’ meetings must be observed. Similar to creditors’ meetings in insolvency proceedings, Liechtenstein bond legislation allow for the convening of such meet- ings. Legal counsel must carefully verify the condi- tions for convening, and within the framework of a meeting, out-of-court measures – such as a deferral of interest payments – can be agreed. Such measures may, in turn, prevent the initiation of civil litigation. Moreover, the issuer is often faced with a “two-front battle”, needing to manage both the dispute with the investor and measures addressing the Project Company in default. Determining the best approach requires consideration of out-of-court and judicial restructuring options, civil litigation, and other rem- edies. In evaluating the course of action, contractual documents – typically a loan agreement – must be thoroughly analysed, alongside the financial position of the parties. The Project Company’s location and the question of whether the issuer’s claims are secured and enforceable are central to this legal assessment. Criminal aspects Experience in recent years has shown that bond struc- tures may also raise criminal law considerations. The lack of regulatory oversight of issuers and the Bonds they issue in Liechtenstein means that Bonds can potentially be used for unlawful purposes. This may occur, for example, if investors’ funds are not actually transferred to the Project Company, are not invested in accordance with the securities prospectus, or if the Bond structure is organised as a Ponzi scheme. Against this background, investors may need to con- duct criminal law assessments as well. These cor-
porate structures are often highly complex and inter- twined, making it difficult for investors to determine whether any criminal conduct has occurred. A criminal law review by legal counsel may therefore be essen- tial. Legal counsel will typically undertake such a review when suspicions arise that assets are in peril in con- nection with the bond issuance or repayment process. In this context, correspondence with the issuer can be informative, as it may help ascertain the underlying substance of both the Bond Issuer and the Project Company. If suspicions of criminally relevant conduct are sub- stantiated, filing a criminal complaint with the compe- tent prosecuting authority constitutes an essential tool from the asset recovery toolkit in Liechtenstein. Lack- ing the legal concept of disclosure, it is the appropri- ate means to get information on the opposing party. Criminal authorities in Liechtenstein have full statutory powers to freeze assets, raid corporate premises and seize documents. Conclusion The growing importance of bonds in the Liechtenstein financial market presents significant opportunities for both investors and issuers. This rising significance is also reflected in the increasing number of legal dis- Of enduring significance in Liechtenstein law and dis- pute resolution is the corporate form known as the “ Anstalt ”. An Anstalt is a legal entity sui generis, origi- nating in Liechtenstein and found in very few other legal systems. In contrast to limited liability companies, which are comparatively rare in Liechtenstein, Anstalts are fre - quently encountered and therefore regularly feature in Liechtenstein legal disputes. An understanding of their structure and functioning is consequently of consider- able importance. While Anstalts can be structured as companies with social parts granting control over them, they can putes encountered in practice. The Liechtenstein “Anstalt” Introduction
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