LUXEMBOURG Trends and Developments Contributed by: Ana Nicoleta Andreiana, Madeleine Dos Santos Marques, Patrick Ries and Sofia Polykandrioti, Loyens & Loeff
case. Indeed, in the absence of clear rules on inter - national jurisdiction in the Law of 7 August 2023, the District Court had to rely on the criterion of the regis - tered office to find jurisdiction over a debtor. This gap is now closed, as the inclusion of all types of judicial reorganisations pursuant to the Law of 7 August 2023 in Annex A allows the courts to rely on Article 3 of the Insolvency Regulation which states that the courts of the member state where the COMI of the debtor is located have exclusive jurisdiction to open primary insolvency proceedings (which by defi - nition now includes Luxembourg judicial reorganisa - tions). The European Court of Justice insisted on the exclusive nature of the jurisdiction conferred by Article 3 in Galapagos (C-723/20, §30). In Galapagos , the Luxembourg District Court had also given useful guidance on its stance regarding COMI shifts. The court ruled that for a COMI shift to be recognised, and thus for the Luxembourg courts to decline jurisdiction on the basis of Article 3, all con - nections with Luxembourg would need to be com - pletely severed. It held that this was not the case, as although significant steps had been undertaken to transfer the COMI to England, there remained some links with Luxembourg, namely the registered office, the corporate documents and the assets of the com - pany. In light of these considerations, the inclusion of the Luxembourg judicial reorganisation proceedings in Annex A will have significant consequences, due to the exclusive nature of the jurisdiction conferred by Article 3. Indeed, any breach of an exclusive juris - diction provision is grounds for refusal of exequatur pursuant to Luxembourg law. This means that, in the absence of a valid COMI shift, the exequatur of foreign restructuring proceedings which are the functional equivalent of those established under the Law of 7 August 2023 will likely be refused. Evidence of recog - nition in Luxembourg, which is sometimes required in foreign restructuring proceedings involving a Luxem - bourg debtor, will thus be harder to obtain. It also means that pending foreign restructuring pro - ceedings may no longer be taken into account, as they were, for instance, in Aggregate ,where the debtor was
able to claim a stay pending the English restructuring proceedings. This is particularly relevant for the only form of judicial reorganisation that can be creditor-led – the judicial transfer of assets and liabilities. In combination with the scrutiny of the Luxembourg courts regarding alleged COMI shifts, it can reason - ably be argued that in-court restructurings of the debt of Luxembourg companies may now need to take place more frequently within Luxembourg itself. This certainly would be in line with the intention of the European legislature to create efficient and viable restructuring options in all member states. Indepen - dently of this policy consideration, the increasing focus on Luxembourg restructuring options should be a call for the Luxembourg legislature to continue modernising its restructuring legislation, particularly by considering necessary amendments to the Law of 7 August 2023. Appointment of Independent Parties Inside or Outside Judicial Reorganisation Proceedings In alignment with the EU directive it transposed, the Law of 7 August 2023 adopts a debtor-in-possession regime, placing the debtor at the centre of all reorgani - sation measures available. However, it also provides for certain options, whereby the debtor’s management can be assisted (or in limited cases presented below, also replaced) by an independent party. Against this background, the Law of 7 August 2023 provides for the following four options: • outside of judicial reorganisation proceedings under Article 9, the appointment of a company conciliator ( conciliateur d’entreprise ); • outside of judicial reorganisation proceedings under Article 10, the appointment of a court- appointed agent ( mandataire de justice ); • as part of judicial reorganisation proceedings under Article 23, the appointment of a provisional admin - istrator ( administrateur provisoire ); and • as part of judicial proceedings under Article 22, the appointment of an insolvency practitioner ( manda- taire de justice ).
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