LUXEMBOURG Law and Practice Contributed by: Stefanie Ferring, Oliver Zwick and Geoffrey Scardoni, Clifford Chance
5.9 Cash Pooling and Hedging/Cash Management Obligations Cash Pooling Cash pooling is done in Luxembourg. Hedging It is typically possible in Luxembourg transac - tions for a borrower to enter into secured hedg - ing, which would either rank super senior (up to a limit) or senior (subject only to being permit - ted hedging and the relevant hedging agreement complying with the terms of the applicable inter - creditor agreement). 5.10 Bank Licensing Licensing or Regulatory Limitations With respect to licensing and/or regulatory limi - tations or holding of collateral, please refer to 2. Regulatory Environment and 4. Tax Considera- tions . Shared Security Security is typically given to a security agent, which is expressly contemplated by the Luxem - bourg financial collateral law. If a lender transfers its claim on a borrower, this does not impact any financial collateral security given to a security agent. 6. Enforcement 6.1 Enforcement of Collateral by Non- Bank Secured Lenders Enforcement of loans and guarantees can take place by sending a demand for payment, tak - ing into account any applicable contractual agreements. Enforcement of security takes place based upon the occurrence of an event of default (subject to contractual provisions). Such enforcement takes place either by private appropriation or by a private sale. Enforcement
can happen relatively quickly and is straightfor - ward. From an enforcement perspective it does not matter whether the lenders are banks or non-bank private credit providers. Most often in a restructuring, a share pledge enforcement is used to sell the business or do a loan-to- own, and an increase in the market in private credit financings is seen using this share pledge enforcement to implement a restructuring (if it is not possible to do the sale on a consensual basis). 6.2 Foreign Law and Jurisdiction A choice of a foreign law may be upheld in Lux - embourg on the basis of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations (“Rome I”). The sub - mission to the jurisdiction of foreign courts may be upheld in Luxembourg, as may a waiver of immunity of jurisdiction. 6.3 Foreign Court Judgments In Luxembourg, the enforcement of a foreign court judgment or an arbitral award generally does not require a retrial of the merits of the case, but certain conditions must be met. 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights It is difficult to challenge an enforcement, except in case of fraud or abuse of rights. 6.5 Timing and Cost of Enforcement The enforcement as such is instantaneous but usually takes up to two months to prepare. The costs of the enforcement are adviser and valua - tion costs and depend on the circumstances and complexity of the matter.
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