LUXEMBOURG Law and Practice Contributed by: Laure-Hélène Gaicio Fievez, Fabio Trevisan and Carolina Vasselli, BSP
ment to providing businesses in distress with a viable path to recovery, balancing the protection of creditor interests with measures that support long-term stabil - ity and financial rehabilitation.
The scope of the transfer is either determined by the court or left to the discretion of the mandataire de justice , who bears the significant responsibility of assessing the viability of the business ‒ or portions thereof ‒ to be transferred. The agent’s expertise in evaluating economic and operational factors is criti - cal, as the court itself typically lacks the technical and commercial knowledge required for such decisions. To fulfil their mandate, the mandataire de justice devel- ops one or more transfer proposals, which may be prepared simultaneously or in succession. These pro - posals must be submitted to both the juge délégué and the debtor at least two days before the court hearing at which the agent seeks authorisation to implement the proposed transfer(s). Once the court approves the plan, the agent is empowered to carry out the transfer(s). 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation In Luxembourg, the restructuring proceedings under the Law of 7 August 2023 allow for flexible and con - fidential proceedings for companies in distress. This process can involve both in-court and out-of-court procedures, each providing certain protections and opportunities for creditors and shareholders to enforce or defend their rights. The new insolvency law aims to balance the interests of distressed businesses with those of their creditors. • Shareholders play a secondary role in reorgani - sation process. In Luxembourg’s restructuring procedures, they typically retain ownership unless otherwise specified by a court-ordered transfer. However, their rights may be diluted, especially if the reorganisation requires significant changes to the company’s capital structure. Shareholders gen - erally cannot disrupt the reorganisation process, and their ability to retain any ownership depends on the success of the restructuring and the avail - ability of surplus assets after satisfying creditors’ claims. • In Luxembourg, secured creditors generally hold significant power due to the priority of their claims on specific collateral.
4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation
In restructuring proceedings, two key office holders play pivotal roles: the juge délégué (delegated judge) and the mandataire de justice (court-appointed agent). Their respective duties are essential to ensuring the smooth progression of the process and achieving the objectives set by the restructuring framework. The Delegated Judge (Juge Délégué) The juge délégué is tasked with overseeing the proper conduct of the restructuring proceedings. This role is typically entrusted to a judge with substantial experi - ence in commercial law, and a thorough knowledge of the relevant legal framework. The juge délégué acts as a supervisory authority, ensuring that all procedural requirements are met and that the interests of the stakeholders ‒ creditors, employees and the debtor ‒ are respected. Beyond legal expertise, this position demands a high level of availability and engagement to address any emerging issues promptly. The juge délégué also liaises with other actors involved in the proceedings, including the court-appointed agent, providing guidance and approval where necessary to keep the process on track. The Court-Appointed Agent (Mandataire de Justice) The mandataire de justice is appointed automatically when a restructuring by transfer under court order is initiated. The agent’s appointment is published in the Luxembourg Business Registry to ensure transpar - ency. The primary responsibility of the mandataire de justice is to organise and execute the transfer or assignment of the debtor’s movable or immovable assets. These assets are identified as essential or beneficial for pre - serving all or part of the debtor’s economic activity.
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