LUXEMBOURG Law and Practice Contributed by: Laure-Hélène Gaicio Fievez, Fabio Trevisan and Carolina Vasselli, BSP
4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation The Law of 7 August 2023 introduced significant reforms aimed at modernising insolvency law in Lux - embourg. A cornerstone of this reform is the intro - duction of three new judicial restructuring procedures, which aim to provide businesses with flexible mecha - nisms to address financial difficulties while preserving economic value and safeguarding employment. These proceedings allow businesses to obtain a suspension ( sursis ) of payments, enabling them to restructure or transfer their operations effectively. The procedures are designed for the following purposes. • Settlement Agreement ( Accord Amiable ) – negoti - ating a mutual agreement between the debtor and creditors to restructure debts. • Collective Agreement ( Accord Collectif ) – securing creditor approval for a collective restructuring plan in accordance with Articles 38 to 45 of the Law of 7 August 2023. • Transfer by Court Order ( Transfert par Décision de Justice ) – enabling the transfer of all or part of the debtor’s assets or business operations to third par - ties under court supervision, as provided in Articles 55 to 67. The Accord Amiable has already been addressed in 3.1 Out-of-Court Restructuring Process , with the difference that if the debtor seeks an accord ami- able within the judicial procedure, the debtor benefits from a stay of payments from four to 12 months. This section will, however, focus on the two other judicial restructuring procedures: Accord Collectif and Trans- fert par Décision de Justice . Judicial Restructuring by Collective Agreement (Accord Collectif) The primary purpose of Accord Collectif proceedings is to allow financially distressed businesses to restruc - ture their operations and debts under judicial supervi - sion, with the agreement of creditors.
Initiation of proceedings The initiation of Accord Collectif proceedings may be requested by: • the debtor or their legal representatives; • creditors, provided they can demonstrate the debtor’s inability to meet payment obligations; and • the state prosecutor, particularly when the public interest is at stake. This broad range of eligible initiators underscores the law’s flexibility in addressing diverse financial crises. Key criteria The principal criterion for initiating these proceedings is the debtor’s cessation of payments ‒ an inability to meet debt obligations as they fall due. However, the Law of 7 August 2023 also allows pre-emptive action if insolvency is threatened but not yet realised. This pro - vision facilitates early intervention, giving businesses the opportunity to avoid formal insolvency through proactive restructuring. Both individual entrepreneurs and corporate entities can utilise these procedures, highlighting their appli - cability across a wide spectrum of business activities. Application process To initiate proceedings, the debtor must submit an application to the court. This application typically includes: • a statement of facts – a detailed explanation of the financial difficulties and the imminent or potential threat to the business’s continuity; • objectives – a clear outline of the intended out - comes, such as restoring solvency, safeguarding jobs or satisfying creditor claims; and • proposals – specific measures to address financial difficulties, such as debt restructuring plans, opera - tional changes or asset sales. Upon filing, the court appoints a delegated judge ( juge délégué ) to oversee the process. Key features of the proceedings include:
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