The law of 10 July 2020 on professional payment guarantees, which aims to create greater freedom of contract while ensuring legal certainty in the provision of personal guarantees governed by Luxembourg law, recently entered into force. The new law is undoubtedly a welcome addition, especially in times of heightened uncertainty, and demonstrates once again Luxembourg's attractiveness as a forward-looking and business-friendly financial centre.
The legal form known as the European cooperative society (SCE) provides a structure through which cooperatives in the European Union can more easily carry out cross-border activities in other EU member states. Luxembourg has passed a law exercising a number of options provided under the relevant EU regulation. For Luxembourg SCEs, the regulation must be read alongside the Luxembourg Companies Law.
Luxembourg recently adopted a number of legislative reforms aimed at modernising the rules applicable to commercial companies, including a number of reforms which could affect their restructuring and insolvency. Although the main purpose of these changes is to modernise the rules applicable to commercial companies and the relevant publication formalities, they may also prove useful in the framework of corporate restructuring and the prevention of insolvency.
Following the recent enactment of the act modernising the Company Law 1915, Luxembourg law now officially recognises the possibility for companies to be wound up by means of a simplified procedure. Although a simplified procedure had previously existed in notarial practice, it lacked a clear legal basis. The new procedure is an unquestionably useful tool which will further enhance Luxembourg's business-friendly reputation.
Under Luxembourg bankruptcy law, IP licence agreements are regarded as long-term agreements, rather than assets per se. Article 30 of Bill 6539 states that insolvency proceedings do not automatically lead to the termination of ongoing contracts. As there are no specific rules for IP licence agreements in the event of insolvency, the general rules of contract law will apply to such agreements under these circumstances.
The number of companies declared bankrupt in Luxembourg has increased tremendously since 2009, mainly due to the existing legislation, which is obsolete and no longer suited to modern financial challenges. As such, a bill has been introduced to provide customised tools to help distressed companies to continue their activities and protect stakeholders, notably by favouring restructuring over liquidation.
The national statistics for the number of bankruptcies between September and November 2006 show a slight downward trend in comparison with the figures for the same period in 2005. However, the Brussels-Capital region has seen a sharp rise, with the number of bankruptcies increasing by almost 18%.
After many legislative changes and much dispute over contradictory case law in recent years, outstanding issues surrounding the admission of debts to bankruptcy proceedings and the discharge and excusability of guarantors appear to have been resolved. Belgian law now definitively excludes the excusability of bankrupt corporate entities.
A decision by the commercial court of Tournai is believed to be the first in Belgium to apply Article 3(1) of the EU Insolvency Regulation. The court held that it did not have international jurisdiction to open insolvency proceedings against a company with branches in Belgium, Italy and Tunisia, as competence resided with the courts of the state in which the debtor's centre of main interests was located.