Closing of a bankruptcy case for lack of assets does not end the bankruptcy operations in Luxembourg
10/12/2015
According to the Court of Appeal, instead of entirely putting an end to bankruptcy operations, the decision to close the bankruptcy case only "suspends the bankruptcy process", while restoring individual rights to creditors. The appeal judges further indicated that "the bankruptcy regime stops existing, but the debtor remains under the threat of the re-opening of bankruptcy operations, which virtually survive".
The decision rendered on 11 November 2015 by the Court of Appeal of Luxembourg hereby confirms the position of many practitioners, who follow case law, that a commercial company survives even after the end of the bankruptcy case was closed by court decision, and furthermore indicates how such company survives.
Article 536 of the Luxembourg Commercial Code deals with the closing of bankruptcy due to lack of assets and, on the basis of such provision, the courts can decide to put an end to the bankruptcy process, when the assets recovered are not sufficient to cover the liquidation and administration costs. Article 536 al 2 of the Luxembourg Commercial Code in addition provides that the immediate consequence of this court decision is that "creditors recover their individual rights against the person and the assets of the insolvent entity" .
Although these legal provisions and the Luxembourg trade register's internal regulation (which indicates that the ending of an insolvency proceeding does not lead to deletion of the company from the register), implied that the legal entity will survive the end of the bankruptcy process, the specifications set forth in the decision of the Court of Appeal of 11 November 2015 clarify the exact status of a commercial company post-bankruptcy and provide more legal certainty on the subject.
The suspension of the bankruptcy process has the advantage to preserve the possibility to distribute any asset recovered, in accordance with bankruptcy mandatory rules, but it leaves open the exact modalities for the re-opening of the bankruptcy process.
Zie ook : Nautadutilh Avocats Luxembourg SÃ rl ( Mr. Antoine Laniez )
Mr. Antoine Laniez
