Introduction

The New Law applies to all traders (commerçants), craftsmen, commercial companies (including sociétés en commandite spéciale) and civil companies, with certain specific exceptions relating to investment firms, insurance and reinsurance companies, undertaking for collective investments, specialized investment funds, venture capital investment companies, pension funds and RAIF.

The main objective of the New Law is to identify and preserve companies in difficulty. Existing reorganisation procedures such as controlled management (gestion contrôlée) and composition with creditors (concordat préventif de faillite), which were rarely used in practice, have at the same time been repealed.

A framework for the detection of companies in difficulty and companies likely to be declared insolvent (en faillite)

1.1 Access to information

The Minister for the Economy and the Minister for Small and Medium-sized Businesses (the “Ministers”, each, a “Minister”) shall, for their respective areas, be responsible to detect debtors in financial difficulty when these financial difficulties that could jeopardise the continuity of the debtor's business. For the purposes of fulfilling these duties, the competent ministers shall have access to certain data including information held by the National Institute of Statistics and Economic Studies as manager of the Central Balance Sheet (CSBO), judgments of condemnation by default and contradictory judgments pronounced against debtors who have not contested the principal amount claimed, notices of redundancy for economic reasons and a list of debtors who have not paid their social security and VAT debts in full within three months. When the competent Minister considers that the continuity of a debtor's business is likely to be jeopardised, s/he may invite the debtor concerned to obtain any information relating to the state of its affairs and inform it of the reorganisation measures available to it.

1.2 Unit for companies in difficulty

In addition, a new assessment unit for companies in difficulty (Cellule d'évaluation des entreprises en difficulté) is set up to assess the appropriateness of insolvency petitions. It shall be composed of five civil servants appointed by the Minister for the Economy upon nomination of the Joint Social Security Centre, the Ministers and the Minister of Finance (with respect to representatives of the Direct Tax Administration and the Registration Duties, Estates and VAT Authority). The organisation, operation and compensation of the members of such body shall be determined by Grand Ducal regulation and its operating costs are entirely borne by the State.

1.3 Company conciliator

The New Law further provides, as a conservatory measure, for the appointment of a company conciliator by the competent Minister, at the request of the debtor, with a view to facilitating the reorganisation of all or part of the debtor's assets or activities. The company conciliator is chosen from among the sworn experts appointed as company conciliators pursuant to the amended law of 7 July 1971 establishing sworn experts, translators and interpreters, company conciliators and agents of justice in criminal and administrative matters and supplementing the legal provisions relating to the swearing in of experts, translators and interpreters (as amended, the “Law of 7 July 1971”). The company conciliator's mission, whether outside or as part of a judicial reorganisation procedure, is to prepare and promote either the conclusion and implementation of an amicable agreement (accord amiable), to obtain the agreement of creditors on a reorganisation plan or the transfer by court order of all or part of the assets to one or more third parties in accordance with the New Law.

1.4 Judicial representative(s)

Where serious and proven breaches by the debtor or one of its corporate bodies threaten the continuity of the business and the measure requested is likely to preserve that continuity, the judge presiding the chamber of the Tribunal d'Arrondissement sitting in commercial matters and as in summary proceedings, referred to by the Public Prosecutor or any interested party, may appoint one or more judicial representatives (mandataire de justice) from among the sworn experts appointed as judicial representatives pursuant to the amended Law of 7 July 1971.

The order appointing the court-appointed representative shall specify the scope and duration of the representative's mission. The opening of a judicial reorganisation procedure does not in itself put an end to the mission of the court-appointed representative. The judgement initiating the judicial reorganisation or a subsequent judgement will decide the extent to which the mission is to be maintained, modified or terminated.

The reorganisation measures

The New Law offers out-of-court and in-court reorganisation mechanisms, which are available as soon as the relevant debtor is in jeopardy in the short or long term:

2.1 Reorganisation by amicable agreement (out-of-court mechanism)

The debtor may propose to all or at least two of his creditors an amicable agreement with a view to

reorganising all or part of its assets or activities. To this end, he may request the company conciliator, whose mission may extend beyond the conclusion and approval of the agreement, with a view to facilitating the implementation of the amicable agreement.

In the event of an amicable agreement, the court, ruling on a petition from the debtor, approves the agreement after verifying that it has been concluded for the aforesaid purpose and grants it enforceability. This decision is not subject to publication or notification, and third parties may only take note of the agreement with the express consent of the debtor. It is not subject to appeal.

The New Law also provides for protection (the “Claw-Back Protection”) against avoidance of cash payments for unmatured debts and non-cash payments for matured debts made under the approved amicable agreement or of acts performed in execution of the agreement, if they were to fall within the so-called hardening period (période suspecte), being the time determined by the court as being that of the cessation of payments in the event of the debtor's subsequent insolvency. The same applies to all other payments made by the debtor for outstanding debts and all other acts for valuable consideration entered into by the debtor, under the agreement, after the cessation of payments and before the judgment opening insolvency proceedings, if, on the part of those who have received payments from the debtor or who have dealt with the debtor, they took place with knowledge of the cessation of payments.

It is further important to note that creditors participating in an amicable agreement cannot be held liable by the debtor, another creditor or third parties for the sole reason that the amicable agreement has not effectively enabled the continuity of all or part of the business.

2.2 Judicial reorganisation (in-court mechanism)

2.2.1 General provisions

1. Objectives of the procedure

The purpose of judicial reorganisation proceedings is to preserve, under the supervision of the judge, the continuity of all or part of the debtor's assets or activities by way of:

• either obtaining a stay of proceedings to enable an amicable settlement to be reached, under the conditions set out above under item 2.1;
• or obtaining the agreement of creditors on a reorganisation plan, in accordance with the New Law;
• or allowing the transfer by court order, to one or more third parties, of all or part of the assets or activities, in accordance with the New Law.

The application to initiate judicial reorganisation proceedings may pursue a specific objective for each business or part of a business.

2. Application and subsequent proceedings

The debtor requesting the opening of a judicial reorganisation procedure submits an application to the court, which shall in principle enclose inter alia a statement of the facts on which the application is based and which show that, in the debtor's opinion the continuity of his business is threatened in the short term or in the long term, an indication of the objective(s) for which he is requesting the opening of judicial reorganisation proceedings and a statement of the measures and proposals he is considering to restore the profitability and solvency of its business, to implement any social plan and to satisfy creditors.

As soon as the application is lodged, a delegated judge is appointed to report to the court hearing the case on the admissibility and basis of the application and on any factor relevant to its assessment.

Any creditor and, with the authorisation of the delegated judge, any person able to demonstrate a legitimate interest may inspect and obtain copies of the documents of the debtor accompanying the application, save personal data and data determined by the delegated judge to be of interest to business secrecy.

The filing of a statement of claim by the creditor in the judicial reorganisation file suspends the limitation period for the claim.

As long as the court has not ruled on the application for judicial reorganisation, whether the action was brought or the enforcement proceedings commenced before or after the application was filed, the following shall in principle apply:

• the debtor may not be declared bankrupt and, in the case of a company, it may not be judicially dissolved (subject inter alia to the application of article 1200-1 of the law of 10 August 1915 concerning commercial companies, as amended (the “1915 Law”) on the liquidation due to activities contrary to criminal law or which seriously contravenes the provisions of the Code de Commerce or the laws governing commercial companies, including the right of establishment), nor be the subject of administrative dissolution proceedings without liquidation;
• no movable or immovable property of the debtor may be realised as a result of enforcement proceedings.

3. Conditions for the opening judicial reorganisation proceedings

Judicial reorganisation proceedings shall be opened as soon as the undertaking is placed in jeopardy, either rapidly or eventually, and as soon as the application referred to above under item 2.2.1 (b) has been lodged. The fact that the debtor is bankrupt is not an obstacle to the opening or continuation of the judicial reorganisation proceedings.

Certain specific provisions apply in case of previous reorganisation proceedings. E.g., if the application comes from a debtor who has already applied for and obtained the opening of judicial reorganisation proceedings less than three years earlier, the judicial reorganisation proceedings may only be opened if they are aimed at the transfer, by court order, of all or part of the debtor's assets or activities.

4. Judgment on the application for judicial reorganisation and its consequences

The court shall examine the application for judicial reorganisation within fifteen days of its filing with the court registry. If the conditions referred to above under item 2.2.1 (c) appear to be met, the court shall declare the judicial reorganisation proceedings open and set the duration of the stay, which may not exceed four months; failing this, the court shall reject the application.

The judgment declaring the judicial reorganisation proceedings open shall be notified to the debtor and published in the Recueil électronique des sociétés et associations (“RESA”). The debtor shall individually notify the creditors of the judgment within fourteen days of its pronouncement. Creditors may consult the list of creditors at the court registry, subject to certain conditions.

5. Judicial representative(s) and provisional administrator

Under the New Law there is the possibility to request the appointment of one or more judicial representative(s) (mandataire(s) de justice) whose mission is to be defined on a case-by-case basis or a provisional administrator (administrateur provisoire) to manage the debtor’s business activities, each chosen among the list provided for in the Law of 7 July 1971:

• Where the debtor so requests and where such an appointment is useful to achieve the purposes of the judicial reorganisation procedure, the court may, by the same decision or at any other time during the judicial reorganisation procedure, appoint a judicial representative chosen from among the sworn experts appointed as judicial representatives pursuant to the Law of 7 July 1971 to assist the debtor in its judicial reorganisation, in which case the court will determine the assignment on the basis of the debtor's request.

The same request may be made by a third party who has an interest therein. The application is made by means of a request notified to the debtor by the court registry. The request specifies the mission proposed by the applicant and stipulates that the applicant shall pay the costs and fees of the judicial representative.

• In the event of serious and flagrant misconduct on the part of the debtor or one of its corporate bodies, the court may, at the request of any interested party or the public prosecutor and in the judgment initiating the judicial reorganisation proceedings or in a subsequent judgment, after hearing the debtor and the delegated judge in his report, substitute a provisional administrator for the duration of the stay. The provisional administrator is chosen from the list provided for in article 10 of the Law of 7 July 1971.

6. Effects of the reorganisation decision

The debtor's movable or immovable property may in principle not be enforced during the suspension period. During the same period, a debtor who is a trader (commerçant)) may not be declared bankrupt, subject to the debtor's own declaration, and a company may not be judicially dissolved or be the subject of administrative dissolution proceedings without liquidation.

No seizure may be carried out in respect of claims (other than employee claims) against the debtor arising prior to the judgment opening the judicial reorganisation proceedings or arising as a result of the filing of the petition or the decisions taken in the context of the judicial reorganisation proceedings (“Relevant Ordinary Claim(s)”) during the suspension period. Seizures made previously retain their protective nature, but the court may, depending on the circumstances and insofar as such release does not cause significant prejudice to the creditor, grant release after hearing the delegated judge in his report, as well as the creditor and the debtor.

The stay does not prevent the debtor from voluntarily paying debt resulting from Relevant Ordinary Claims insofar as such payment is necessary to ensure the continuity of the business. The Claw-Back Protection applies to payments made during the suspension period.

Without prejudice to the application of the 2005 Law, set-off between Relevant Ordinary Claims and claims arising during the suspension of payment is only permitted if these claims are related.

Notwithstanding any contractual stipulations to the contrary, the application for or commencement of judicial reorganisation proceedings shall not terminate any contracts in progress or the terms and conditions of their performance.

A breach of contract committed by the debtor before the stay is granted shall not entitle the creditor to terminate the contract where the debtor puts an end to his breach by performing within a period of fifteen days after he has been given formal notice to do so by the creditor, after the stay has been granted. As soon as the judicial reorganisation proceedings have been opened, the debtor may, however, unilaterally decide to suspend performance of his contractual obligations (other than in relation to employment contracts) for the duration of the stay by notifying the other party of this decision, where the reorganisation of the undertaking so imperatively requires.

Penalty clauses, including clauses increasing the rate of interest, intended to cover on a lump-sum basis the potential damage suffered as a result of non-compliance with the main obligation, remain ineffective during the stay period and until full implementation of the reorganisation plan as far as the creditors included in the plan are concerned. The creditor may, however, include the actual loss suffered as a result of the failure to comply with the main obligation in its claim for the stay.

A claim arising from current contracts for successive services is not subject to the stay, including contractually due interest, insofar as it relates to services performed after the judgment opening the judicial reorganisation proceedings.

7. Extension of the stay

At the request of the debtor or of the judicial representative in the case of transfer proceedings by court order, and on the report of the delegated judge, the court may extend the stay granted for such period as it shall determine. The maximum duration of the suspension thus extended may not exceed twelve months from the date of the judgment granting the suspension.

However, in exceptional circumstances and if the interests of the creditors so permit, the maximum duration of the stay provided for above may be extended by a maximum of six months, without the total duration of the stay exceeding twelve months from the date of the judgment granting the stay.

Exceptional circumstances within the meaning of this provision may include the size of the company, the complexity of the case or the importance of the jobs that can be safeguarded.

8. Modification of the purpose of the procedure and early termination

At any time during the stay, the debtor may ask the court to change the objective of the judicial reorganisation procedure.

The debtor may, at any stage of the proceedings, waive all or part of its application for judicial reorganisation. The court, at the request of the debtor and after hearing the delegated judge's report, shall terminate the judicial reorganisation proceedings in whole or in part.

Where the debtor is manifestly no longer in a position to ensure the continuity of all or part of its assets or activities with regard to the objective of the judicial reorganisation proceedings or where the information provided to the delegated judge, the court or the creditors when the application is filed or subsequently is manifestly incomplete or inaccurate, the court may order the early termination of the judicial reorganisation proceedings by a judgment closing them.

The court shall rule of its own motion or at the request of the debtor, the public prosecutor or any interested party against the debtor, after hearing the report of the delegated judge and the opinion of the public prosecutor. In this case, the court may, in the same judgment, declare the debtor bankrupt or, if the debtor is a legal entity, compulsorily liquidated if the conditions are met.

2.2.2 Judicial reorganisation by collective agreement

1. Procedure

Where the purpose of the judicial reorganisation proceedings is to obtain the agreement of the creditors to a reorganisation plan, the debtor shall file a plan with the court registry at least twenty days before the hearing set in the judgment. The debtor shall notify each of the holders of the Relevant Ordinary Claims, within fourteen days of delivery of the judgment declaring the judicial reorganisation proceedings open, of the amount of the claim for which that creditor is entered in its books, accompanied, as far as possible, by a reference to the asset encumbered by a security interest or a special lien securing that claim or to the asset of which the creditor is the owner, as well as the class to which the creditor belongs (i.e. holder of Relevant Ordinary Claims or of Relevant Ordinary Claims secured by a special lien or mortgage secured by a special lien or mortgage, claims by owner-creditors and overdue claims by tax and social security tax and social security authorities (“Relevant Extraordinary Claim(s)”)).

Any holder of Relevant Ordinary Claims who disputes the amount or quality of the claim indicated by the debtor, including the class of holder of Relevant Ordinary Claims or Relevant Extraordinary Claims to which he belongs according to the debtor, and any other interested party who claims to be a creditor may, in the event of persistent disagreement with the debtor, bring the dispute before the court which opened the judicial reorganisation proceedings. Any Relevant Ordinary Claim included in the submitted creditor list may be contested in the same way by any interested party. On the report of the delegated judge, the court may at any time, in the event of absolute necessity and at the request of the debtor or a creditor, amend the decision determining the amount and status of a Relevant Ordinary Claim on the basis of new information.

2. Reorganisation plan

During the stay, the debtor, with the assistance of any appointed judicial representative where applicable, shall draw up a plan consisting of a descriptive part and a prescriptive part:

• The descriptive part of the plan shall, inter alia, mention the debtor's assets and liabilities at the time the plan is presented, including the value of the assets, the economic situation of the debtor and the situation of its employees, a description of the causes and extent of the debtor's difficulties and the means to be implemented to remedy them, the different categories of claims or interests affected by the plan, the general consequences on employment, any new financing anticipated as part of the plan and the reasons why the new financing is necessary to implement the plan and a statement of reasons explaining why the plan offers a reasonable prospect of avoiding the debtor's insolvency and ensuring its viability, and including the preconditions necessary for the plan's success.

• The prescriptive part of the plan shall contain the measures to be taken to pay the holders of the Relevant Ordinary Claims appearing on the creditor list and the proposed duration of any proposed restructuring measures.

The plan shall set out the proposed payment terms and reductions of the Relevant Ordinary Claims in principal and interest. It may provide for the conversion of debts into shares and the differentiated settlement of certain categories of debts, in particular according to their size or nature. The plan may also provide for the waiver of interest or the rescheduling of interest payments, as well as the priority deduction of sums realised from the principal amount of the debt. The plan may also contain an assessment of the consequences that approval of the plan would have for the creditors concerned.

Where certain categories of claims are treated differently, the creditors concerned must be treated equally within these categories and in proportion to the amount of their claim. The plan further needs to meet the criterion of the best interests of creditors in that no creditor is in a less favourable position as a result of the restructuring plan than it would be if the normal order of priorities were applied, either in the case of insolvency or compulsory liquidation, or in the case of a better alternative solution, if the restructuring plan were not approved.

When the continuity of the company requires a reduction in the payroll, a social component of the

reorganisation plan is provided for, insofar as such a plan has not yet been negotiated. Where appropriate, the plan may provide for redundancies.

The proposals include a payment proposal for all creditors. The plan may not contain any reduction or waiver of claims arising from work services (prestations de travail) performed prior to the commencement of the judicial reorganisation proceedings. The plan may not provide for a reduction in either alimony debts or debts arising from the debtor's obligation to make good the damage caused by his fault and linked to the death or physical injury of a person nor for the reduction or elimination of criminal fines.

Without prejudice to the payment of interest due to them under the terms of the agreement or by law on their claims, the plan may provide for the deferment of the exercise of the existing rights of holders of Relevant Extraordinary Claims for a period not exceeding twenty-four months from the date of the approval judgment. Under the same conditions, the plan may provide for an extraordinary extension of the stay for a period not exceeding twelve months. Except with their individual consent or an amicable agreement, the plan may not include any other measure affecting the rights of holders of Relevant Extraordinary Claims.

The period for implementing the plan may not exceed five years from the date of approval.

3. Hearing and approval of the reorganisation plan

At the hearing, the court shall hear the report of the delegated judge, as well as the arguments of the debtor and the creditors.

The reorganisation plan shall be deemed to have been approved by the creditors when the ballot receives the favourable vote of a majority of the creditors in each class, representing, by their uncontested claims or claims provisionally admitted in accordance with the New Law, half of all the sums due in principal.

For the purposes of calculating majorities, the creditors and amounts due included in the list of creditors filed by the debtor in accordance with the New Law, as well as creditors whose claims have subsequently been provisionally admitted in accordance with the New Law, are taken into account. Creditors who did not take part in the vote and the claims they hold are not taken into account when calculating majorities. Creditors who vote against the adoption of the plan may challenge, giving reasons, that the plan satisfies the criterion of the best interests of the creditors.

Within fifteen days of the hearing, and in any event before the expiry of the stay set, the court shall decide whether or not to approve the reorganisation plan. It verifies that any new financing provided for is necessary to implement the restructuring plan and does not excessively prejudice the interests of the creditors and, in the event of a challenge by the creditors voting against the adoption, whether the plan satisfies the criterion of the best interests of the creditors (the “Conditions”).

If the plan has not been approved by the affected parties in accordance with the above, in each class authorised to vote, it may nevertheless be approved on the proposal of the debtor, or with the agreement of the debtor, and be imposed on the dissenting classes authorised to vote, if it has been approved by one of the classes of creditors authorised to vote and if the restructuring plan meets at least the following conditions:

• It complies with the Conditions;
• if the plan has only been approved by the class of holders of Relevant Ordinary Claims, that the holders of the class of Relevant Extraordinary Claims are treated more favourably than the holders of the class of Relevant Ordinary Claims; and
• no class of affected parties may, under the plan, receive or retain more than the total amount of its claims or interest.

Court approval of the restructuring plan can only be refused in the following cases:

• in the event of failure to comply with the formalities required by this law,
• if the Conditions are not met,
• if the plan does not offer a reasonable prospect of avoiding the debtor’s insolvency or ensuring the viability of the business, or
• for breach of public order.

It may not be made subject to any condition not provided for in the plan, nor may it be modified in any way whatsoever. Subject to any disputes arising from the implementation of the plan, the judgment on approval closes the judicial reorganisation proceedings. It shall be published in the RESA and notified by the court registry to the debtor and the creditors.

Approval of the reorganisation plan makes it binding on all holders of Relevant Ordinary Claims.

Unless the plan expressly provides otherwise, full implementation of the plan releases the debtor totally and definitively from all claims under the plan.

4. Revocation of the reorganisation plan

Any creditor may request the revocation of the reorganisation plan where the debtor is manifestly no longer able to implement it and the creditor suffers prejudice as a result. The court shall rule on the report of the delegated judge, after hearing the debtor. The judgment revoking the plan shall be notified to the creditor who requested the revocation and to the debtor and published in the RESA.

If the debtor is declared bankrupt, the reorganisation plan is automatically revoked.

Revocation of the reorganisation plan shall render it ineffective, except in respect of payments and

transactions already effected, and in particular the sale already effected of all or part of the company or its activities.

Revocation means that the debtor and the creditors find themselves in the position they would have been in if there had been no approved reorganisation plan.

Transfer by court order

2.2.3 Transfer by court order

1. Conditions

The transfer by court order of all or part of the business or its activities may be ordered by the court with a view to ensuring their continuance where the debtor consents thereto in its petition for judicial reorganisation or subsequently during the course of the judicial reorganisation proceedings.

The same transfer may be ordered at the request of the State Prosecutor or by subpoena from a creditor or any person with an interest in acquiring all or part of the business:

• where the debtor fulfils the conditions for insolvency without having applied for the opening of judicial reorganisation proceedings;
• where the court rejects the application to initiate the judicial reorganisation proceedings, orders the early termination thereof or revokes the reorganisation plan pursuant to the New Law;
• where the creditors do not approve the judicial reorganisation plan pursuant to the New Law; or
• where the court refuses to approve the reorganisation plan pursuant to the New Law.

2. Procedure

As soon as the request for transfer is lodged or the summons served, the court shall designate a delegated judge to report to the court hearing the case on the basis of the application and on any factor that may be relevant to its assessment.

The judgment ordering the transfer appoints a judicial representative chosen from among the sworn experts appointed as judicial representatives pursuant to the Law of 7 July 1971, who is responsible for organising and carrying out the transfer in the name and on behalf of the debtor. It determines the purpose of the transfer or leaves it to the discretion of the judicial representative. The court may, in the same judgment, order an additional stay, not exceeding six months from the date of its decision. The judgment shall be published in the RESA.

The rights and obligations arising for the transferor from employment contracts existing at the time of the transfer of the business are, as a result of this transfer, transferred to the transferee. The transferor or the judicial representative shall inform the prospective transferee in writing of all obligations relating to the employees concerned by the transfer and of any pending actions that these employees may have brought against the employer. The transferee may not be held to any obligations other than those thus communicated in writing. If the data is incorrect or incomplete, the employee has the right to request rectification of the data and claim damages from the transferor.

The judicial representative shall organise and carry out the transfer ordered by the court by the sale or assignment of the movable or immovable assets necessary or useful to maintain all or part of the economic activity of the company or in the form of a merger. He seeks and solicits offers, giving priority to maintaining all or part of the company's business, while taking into account the rights of creditors (the “Priority”). He chooses whether to proceed with the sale or transfer publicly or by mutual agreement, in which case he defines the procedure to be followed by bidders in its invitation to tender. If he intends to communicate a bid to other bidders to organise one or more higher bids, he will indicate this and specify how these higher bids will be organised. Where applicable, the bidder shall state the guarantees of employment and of payment of the sale price, as well as the business and financial plans that must be communicated. For a bid to be taken into consideration, the price offered for all the assets sold or transferred must be equal to or higher than the presumed forced realisation value in the event of insolvency or liquidation. The prospective offeror may indicate one or more current contracts that are not those concluded intuitu personae between the debtor and one or more co-contractors that it wishes to take over in full, including past debts, if its offer is accepted.

Where the sale involves real estate and the proposed sale provides for a public sale, the sale shall take place in accordance with the relevant provisions of the New Code of Civil Procedure, through the notary appointed by the court. Where the sale relates to real estate and the judicial representative chooses to proceed by mutual agreement, he submits to the court a draft deed drawn up by a notary that he designates and sets out the reasons why a sale by mutual agreement is necessary. The draft deed must be accompanied by an expert's report and a certificate from the Registrar of Mortgages, dated after the judicial reorganisation proceedings were initiated, setting out the existing registrations and any transcriptions of orders or seizures relating to the said properties.

Where the sale involves movable property, including goodwill, and the judicial representative chooses to proceed by private agreement, creditors who have had their security interests registered or recorded must be called to the authorisation procedure by letter served at least eight days before the hearing. They may ask the court to make authorisation to sell subject to certain conditions, such as setting a minimum sale price.

Where there is more than one comparable offer, the court shall give priority to the offer which guarantees continued employment by means of a social agreement. Where a proposed sale includes several offers from different prospective purchasers or containing different conditions, the court shall select the offer that most closely complies with the Priority.

The judgment authorising the sale shall be published by extract in the RESA.

Further amendments

The New Law partially amends inter alia the 1915 Law, the Commercial Code and the Criminal Code - key changes are:

• The extension of the provisions of the insolvency regime to the self-employed and liberal professions;
• The reclassification of simple and fraudulent bankruptcies as an offence (délit) (and no longer a crime), allowing for an ease in prosecution and a more time-efficient procedure, as well as the setting of a list of actions or omissions that can be qualified as acts of either simple or fraudulent bankruptcies;
• The possibility for insolvent individuals to obtain discharge from the District Court for all or part of the balance of their professional debts (with certain exceptions) arising prior to the insolvency judgment (jugement déclaratif de faillite). Such discharge has no effect on in rem or in personam security interest provided by the bankrupt individual or a third party as a security for the discharged debt;
• The insertion of a legal provision regulating the discovery of assets after the closure of the insolvency or liquidation proceedings and confirming that the company is deemed to exist for the purposes of its liquidation;
• The harmonisation of the time limit for appealing against insolvency judgments (jugement déclaratif de faillite), including at the request of the public prosecutor, in the event of the liquidation of a company which seriously contravenes the provisions of the Commercial Code or the laws governing commercial companies, to forty days following service of the judgment by a bailiff.

Last but not least, a collective agreement in application of the New Law qualifies as a winding-up proceedings under the law of 5 August 2005 on financial collateral arrangements, as amended (the “2005 Law”), and financial collateral arrangements and the valuation and enforcement measures agreed upon by the parties in accordance with the 2005 Law are thus valid and enforceable against third parties, commissioners, receivers, liquidators and other similar persons notwithstanding such collective agreement pursuant to the New Law.

Conclusion

The New Law essentially modernises and replaces outdated reorganisation regimes and introduces new processes and procedures to detect and help companies in difficulties at an early stage. It remains to be seen how these new rules will be received and applied in practice.