The recent law of August 7, 2023, concerning the preservation of companies and the modernization of bankruptcy law, has introduced long-awaited changes, including amicable and judicial reorganization procedures. However, the new law has also modified certain provisions of Luxembourg bankruptcy law, with sometimes significant consequences for the creditors.
Hard Deadline: New Requirement for Creditor Claims
The new law introduces a hard deadline (“délai de forclusion”) obliging creditors to declare their claims to the District Court within 6 months following the bankruptcy judgment. Hence, creditors generally cannot assert their rights if the deadline is not met.
An exception has nevertheless been foreseen: upon written request, the Court may lift the deadline in the presence of moral or material circumstances that prevented the creditor from submitting their claim in a timely manner. However, such cases are likely to be very limited.
Although the bankruptcy judgment is normally published in major newspapers ("Wort" and "Tageblatt"), as well as in the Trade and Companies Register (RCS), the curator (i.e. insolvency manager) is in principle not obligated to individually notify creditors of the bankruptcy or the deadline to file their claims. Therefore, creditors must remain vigilant, regularly consult the RCS and the aforementioned newspapers, and submit their declaration in a timely manner.
Filing of Claims with the Court: Requirement Maintained
It is important to emphasize that claims must be filed exclusively with the Court, not with the curator. Although this was already the norm before the reform, many creditors still submit their declarations directly to the curator. While, in our view, the curator receiving a declaration should notify the creditors or even submit the declaration to the Court themselves, they generally have no legal obligation to do so. This is an important clarification to avoid common mistakes.
The verification of claims and dispute proceedings
The verification of claims procedure itself has not undergone significant changes. Curators perform an initial verification on the date stipulated in the judgment, followed by additional verifications as needed.
However, there are substantial changes in the disputes proceedings. A claim not admitted by the curator must still undergo a disputes proceeding to be accepted in the liabilities (unless otherwise agreed with the curator). What changes now is the obligation for creditors – except for employees– to expressly request a disputes proceeding by submitting an application to the District Court. The curator must first inform the creditor of the dispute by registered letter within 15 days after verifying the claim. The creditor then has 40 days to submit their application, which is again a hard deadline after which the request can no longer be admitted.
But beware: firstly, the law states that the deadline of 40 days starts running from the date of dispatch of the curator's registered letter. Secondly, the law does in principle not provide that the curator is obligated to inform the creditors of their obligation to request a disputes proceeding, or even of the applicable deadline. We believe the curator should still do so, but in the absence of a legal provision, it seems difficult to hold them responsible if they fail to do so.
Entry into Force and Application
The new law, which came into effect on November 1, 2023, generally applies to all bankruptcies, ongoing or initiated thereafter.
Therefore, creditors must quickly adapt to the new legal requirements to best protect their interests in Luxembourg bankruptcy proceedings. Increased vigilance and in-depth knowledge of legislative changes are essential to navigate successfully in this new legal environment.
