LUXEMBOURG Law and Practice Contributed by: Laure-Hélène Gaicio Fievez, Fabio Trevisan and Carolina Vasselli, BSP
General Liability Managers may be held liable in the following circum - stances: • contractual liability – when managers fail to act prudently and diligently, causing damage to the company through breaches of their contractual obligations under company law or internal govern - ance rules; and • tort liability – when their negligent or wrongful actions cause damage to third parties, leading to personal liability under tort law. Liability in Bankruptcy In the context of bankruptcy, managers face height - ened scrutiny and may be held civilly or criminally liable for their actions leading up to and during the insolvency process. Criminal liability for negligent or fraudulent bankruptcy Managers may be subject to criminal penalties if they fail to file for bankruptcy within one month of the com - pany’s cessation of payments. Additional criminal liability may arise in cases of fraud - ulent activities, such as misrepresentation, embezzle - ment or deliberate asset stripping. Liability actions by the bankruptcy trustee The bankruptcy trustee ( curateur ) may initiate actions against managers who have contributed to the com - pany’s bankruptcy through their fault or misconduct. Specific Cases of Managerial Liability in Bankruptcy The court may impose severe penalties or liabilities on
co-ordination and co-operation between the courts of different member states. This Regulation determines jurisdiction based on the debtor’s COMI, and insol - vency proceedings are automatically recognised and enforced within the EU, allowing for smoother cross- border co-operation. Apart from this, Luxembourg courts have not entered into any protocol or arrangement with any other for - eign courts. However, when the assets of a debtor are located in Luxembourg, ancillary insolvency proceedings may be opened in Luxembourg if the main insolvency pro - ceedings are pending in another EU member state (in accordance with the provisions of the EU Insolvency Regulation (Recast)). 6.6 Foreign Creditors The Law of 7 August 2023 does not provide any spe - cial procedures or impediments applicable to foreign creditors, the principle being equal treatment between creditors (non-foreigners and foreigners). All creditors should file their claim within the timeframe set by the judgment declaring the insolvency proce - dure open, which is published on the Business Reg - ister website. However, foreign creditors must ensure they follow Luxembourg procedures for lodging claims in the insolvency proceedings, and they may face additional complexities, such as the requirement for translation of documentation or fulfilling specific pro - cedural formalities. 7. Duties and Liability of Directors and Officers 7.1 Duties of Directors Managers of a Luxembourg company are generally required to perform their duties in the best interests of the company. While managers are not ordinarily held personally liable for the debts incurred by the com - pany, exceptions arise where their actions ‒ or inac - tions ‒ cause harm to the company or third parties.
managers in the following situations. Fault contributing to bankruptcy
If a manager’s serious fault or misconduct has signifi - cantly contributed to the company’s insolvency, the court may prohibit them from engaging in any com - mercial activity or holding positions as a manager, director, auditor or similar role in any company.
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