LUXEMBOURG Law and Practice Contributed by: Laure-Hélène Gaicio Fievez, Fabio Trevisan and Carolina Vasselli, BSP
and the mortgage registry for a ten-year enforceability period, renewable thereafter. Security Over Tangible Movable Property Tangible movable property includes assets with physi - cal substance, such as trading stock, machinery, air - craft and ships (subject to specific rules for vessels exceeding 20 tons). Pledges • Types: (a) civil pledges ( gage civil ): governed by Articles 2073–2084 of the Civil Code; and (b) commercial pledges: governed by Articles 110–188 of the Commercial Code and supple - mented by the Civil Code (eg, pledges over a going concern). • Formalities: (a) the pledged asset must be out of the grantor’s possession; (b) for pledges over a going concern, registration with the Mortgage Registry is required; (c) civil pledges and pledges over a going concern must be documented in writing, whereas com - mercial pledges can be proven by any means under the Commercial Code; and (d) all pledges must be notified to and accepted by the debtor to be enforceable against third parties. Transfer of ownership for collateral purposes This involves transferring legal title to the lender as collateral. It may occur: • directly to secure a debt; or • through a fiduciary contract ( contrat fiduciaire ), which limits the lender’s exercise of ownership rights to the terms agreed in the contract. Security Over Intangible Movable Property Intangible movable property refers to assets such as financial instruments (eg, shares, bonds), cash, secu - rities accounts and intellectual property (IP) rights (eg,
• pledge – governed by the Luxembourg Law of 5 August 2005 on financial collateral arrangements (as amended); • transfer of ownership – for collateral purposes, similar to tangible property; and • repurchase agreements ( mise en pension ) – trans - fers of assets to secure obligations under specific or global repurchase agreements. Intellectual property rights • Transfers of title are enforceable against third par - ties if registered with: (a) the Benelux Office of Intellectual Property for trade marks and designs; or (b) the National Intellectual Property Patent Regis - try for patents. • Pledges must be registered with both the admin - istration and mortgage registries for third-party enforceability. Bank accounts Pledges over bank accounts must be: • notified to the account bank; and • subject to the same formalities as civil or commer - cial pledges to ensure enforceability against third parties. Guarantees First-demand guarantees (garanties à première demande) These are “autonomous” securities, meaning the guar - antor cannot invoke exceptions related to the original loan agreement. The guarantee can be formalised as a letter or an agreement and is immediately enforceable against third parties without registration requirements. Personal guarantees or suretyship (cautionnement) These involve a guarantor committing to fulfil the bor - rower’s obligations in the event of default. 2.4 Unsecured Creditors Outside formal proceedings, unsecured creditors can exercise rights such as attachment of assets (pre- judgment) and may retain the title of goods under retention of title clauses. They may also exercise set- off rights if the debtor owes them an obligation.
patents, trade marks). Financial instruments Security can be granted by:
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