The final round of amendments to Luxembourg’s bankruptcy reform could finally be completed before the end of this year Photo: Shutterstock

The final round of amendments to Luxembourg’s bankruptcy reform could finally be completed before the end of this year Photo: Shutterstock

Lawmakers before the end of the year are set to finally vote on new bankruptcy rules more than a decade in the making, a member of parliament confirmed to Delano.

A first bill to reform bankruptcy law in Luxembourg was filed in 2003 by then finance minister Luc Frieden (CSV). Progress through parliament was slow, however. Then came the 2013 elections, further delaying the project. A sub-committee was founded in parliament in 2016 to help speed the process along.

“We will send the last amendments to the state council in the next weeks,” Charles Margue (Déi Gréng) said in an email. The member of parliament chairs the justice committee and is also a member of the bankruptcy sub-committee. “With a bit of luck, we can vote the two draft laws before the summer, otherwise beginning of autumn.”

The initial bill was divided into two draft laws, one dedicated to modernising bankruptcy law and the other to establish procedures for administrative dissolution without liquidation.

This second part will help eliminate empty shells--companies that only exist on paper but have no assets left--without requiring formal bankruptcy proceedings.

More generally, the reform aims to prevent companies from going bust by detecting businesses in trouble early and to protect employees. It will also create better opportunities for entrepreneurs to start another business after a bankruptcy but also prevent business owners who acted in bad faith from starting a new venture.

When Frieden presented the draft law in 2003, he cited a record number of 750 bankruptcies in 2001 as a reason to update procedures. The number of businesses folding had increased from just 320 in 1995.

Bankruptcies reached an all-time high in 2019 when 1,262 companies went out of business. The number remained stable throughout the pandemic as government aid shored up companies impacted by the crisis. Statistics office Statec reported 1,181 bankruptcies in 2021 and 1,179 the year before.

Lawmakers had hoped to vote on the new laws before the summer of 2021, but the pandemic led to further delays. The state council had issued a series of formal oppositions, effectively blocking the bill from a vote until it has been amended. The council checks all law for their compliance with Luxembourg’s constitution and its compatibility with other laws and treaties.

Once parliament has submitted the latest version of the documents, the state council should issue a final opinion and, if there are no further objections, the draft laws can proceed to a vote in the parliament’s plenary, where it needs a simple majority to come into force.

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