Filing a bankruptcy petition
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The purpose of a bankruptcy procedure is to liquidate the assets of an insolvent trader who has lost their creditworthiness. The aim of this procedure is to satisfy creditors' claims.
The bankruptcy procedure is initiated either:
- by acknowledgement of the debtor;
- by way of a court summons by one or more creditors; or
- automatically by the court.
The creditor of a trader or a commercial company who is certain that their debtor can no longer meet their financial commitments can file a bankruptcy petition against their debtor.
Who is concerned
Any creditor who has an outstanding debt with a trader or a commercial company can file a bankruptcy petition against them.
Prerequisites
Debtor
To be declared bankrupt, the debtor must meet all 3 of the following criteria:
- be a commercial company or a natural person registered as a trader: i.e. they carry out commercial activity as their main profession;
- be in a state of cessation of payments: i.e. it is impossible for the debtor to pay their debts. Having occasional financial difficulties is not enough;
- have lost their creditworthiness. This may come about as a result of their being unable to obtain fresh funds in order to pay off their debts and bring the cessation of payments to an end, or their creditors' refusal to grant an extension to the payment period.
Creditor
For the creditor's bankruptcy petition to be admissible, the creditor must:
- have a claim that is:
- unquestionable, i.e. the claim actually exists and is indisputable;
- liquid, i.e. the amount of the claim may be valued in a currency that is legal tender;
- payable, i.e. the claim is due for payment;
- act in good faith. Filing a bankruptcy petition:
- may not be used to intimidate a debtor;
- is not an ordinary debt collection procedure.
How to proceed
Filing a bankruptcy petition
The creditor must summon the debtor to appear before the district court having jurisdiction in commercial matters within 8 days. This is the court whose jurisdiction corresponds to the trader's registered address or the location of the commercial company's registered office.
The bankruptcy petition must state:
- the date;
- if the creditor is:
- a natural person; their surname, first name, profession and home address;
- a legal person:
- its legal form, company name and registered office;
- listed in the Trade and Companies Register (Registre de commerce et de sociétés): its registration number;
- the surname, first name, address and signature of the court bailiff;
- surname, first name, profession of the debtor;
- purpose of the claim and a summary of the arguments;
- the court with jurisdiction over the application;
- the 8-day deadline to appear in court;
- the documents on which the application is based;
- a statement that if the notification is served and the defendant does not appear, the judgment to be rendered will be deemed to have been rendered in the presence of the parties involved and may not be challenged;
- the location, date and time of the hearing at which the case will be called.
The summons is served on the opposing party by a bailiff.
The summons may be filed by email.
This procedure does not require the services of a lawyer, but it is advisable to use one.
Appearance in court
The debtor must appear in person or be represented by:
- a lawyer;
- their spouse or partner;
- relatives by blood or marriage in direct line of descent: parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, etc.;
- relatives by blood or marriage in the collateral line up to the 3rd degree, including: brother, sister, uncle, aunt, nephew, niece, brother-in-law, sister-in-law, etc.;
- persons exclusively in their personal employ or employed by their company.
All representatives, except the lawyer, must have obtained a special power of attorney.
The creditor(s) must prove the existence of:
- their claim(s);
- the 3 conditions required for the declaration of bankruptcy.
The court will deliver its judgment based on the information provided:
- dismissing the claim if it is not justified;
- declaring the trader bankrupt if the conditions are met.
The judgment opening bankruptcy proceedings generally sets the date of cessation of payments as a date prior to the judgment. This date may not be set more than 6 months before the bankruptcy, barring exceptions.
The period between the 'effective' date of cessation of payments and the date of the opening of bankruptcy proceedings is referred to as the 'suspect period' (période suspecte).
Means of recourse against a bankruptcy judgment
Objection
Debtors who do not appear at the hearing leading to their bankruptcy may lodge an objection against the bankruptcy judgment.
The objection must be lodged within 8 days of the publication of the bankruptcy notice in the newspaper that is published in the place nearest to their place of residence.
Any person who has an interest in having a bankruptcy judgment set aside and who was not party to the proceedings that resulted in the bankruptcy may also lodge an objection.
Such an individual has 15 days from the publication of the bankruptcy notice in the newspapers that are published in the towns or cities closest to the bankrupt party's place of residence or registered office.
The objection must be lodged with the district court sitting in commercial matters which delivered the contested bankruptcy judgment. It must be lodged in the same form as the summons for bankruptcy.
Appeal
The district court's decision may be appealed within 15 days of the notification of the judgment.
Only those persons who were party to the proceedings that resulted in the bankruptcy judgment may lodge an appeal.
The appeal is brought before the Court of Appeal.
Hiring the services of a barrister (lawyer admitted to the bar) is mandatory.
The notice of appeal may be filed by email.
Who to contact
-
District Court
- Address:
- Luxembourg
-
District Court
District Court Diekirch
- Address:
-
4, place Guillaume
L-9237
Diekirch
Luxembourg
B.P. 164, L-9202 Diekirch
- Phone:
- (+352) 80 32 141
- Fax:
- (+352) 80 71 19 or (+352) 80 24 84
-
District Court
District Court Luxembourg
- Address:
- Cité judiciaire L-2080 Luxembourg Luxembourg
- Phone:
- (+352) 47 59 811
- Fax:
- (+352) 47 59 81 24 21
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Related procedures and links
Procedures
Links
Legal references
- Code de commerce
-
Loi modifiée du 7 août 2023
relative à la préservation des entreprises et portant modernisation du droit de la faillite
-
Loi du 10 août 1915
Sociétés et associations
