Answer ... Where Luxembourg holding or bond issuing companies are key to a distressed group, the following points are often misunderstood or considered too late, thus jeopardising a smooth restructuring;

• the particularities of the conservative and cumulative insolvency test;
• the lack of availability of efficient in-court recovery proceedings and out-of-court tools;
• the fact that Luxembourg bankruptcy proceedings are aimed at liquidation and give shareholders and creditors no control or influence over the process;
• the statutory timeframe within which to file for bankruptcy once the criteria are met, which may lead to directors’ civil and criminal liability; and
• the fact that bankruptcy will not stop the holder of security assets falling under the Collateral Law from quickly and efficiently enforcing its security, but that such enforcement will not be very useful if the underlying company is first declared bankrupt.