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Financial difficulties - Luxembourg

Updated 01/2010

Legal requirements

The Commercial Code (particularly Book III) covers situations where companies get into difficulty.

  • Commercial Code, Book III pdf [485 KB] français

Stabilising a business

You may be faced with financial difficulties at some point during your business activities. This is why you need to anticipate, detect and deal with financial difficulties at all times.

  • Managing a commercial company français
  • Safeguarding jobs français
  • Safeguarding the business français

When faced with difficult times, a job maintenance plan may be useful. The aim is to adapt a company's workforce, at the same time keeping employees in their jobs.

  • Job maintenance plan pdf [266 KB] français

There are different forms of partial unemployment, in cases of:

  • cyclical economic problems;   
  • structural economic problems;   
  • economic dependency;   
  • force majeure.
  • Different partial unemployment systems français

Access to different sources of finance can help overcome financial difficulties.

When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.

Administrative procedures

Job maintenance plan

The aim of the job maintenance plan is to adjust the headcount of a company in difficulties while keeping the employees in work. The employer has to notify the secretariat of the Economy Committee (at the Ministry of the Economy and Foreign Trade) of the start of discussions on the plan.

  • Economy Committee français
  • Forms - Economy Committee   français
  • Negotiating a job maintenance plan français
  • Exploiting the additional benefits of the job maintenance plan français

Deferment of payment

The system of deferment of payment under common law enables an employer to deal with a temporary financial problem by authorising him to suspend payments to his creditors for a specified period.

The trader has to submit his request in paper form to the district court (tribunal d'arrondissement) and the Supreme Court of Luxembourg (Cour supérieure de justice).

  • District court of Luxembourg français
  • District court of Diekirch français
  • Supreme Court français
  • Requesting a deferment of payment français

A composition (concordat préventif) allows an entrepreneur experiencing financial difficulties to sign an agreement with his creditors and so avoid bankruptcy. This agreement has to be accepted by the court and by the creditors.

The trader must submit his request in paper form to the district court.

  • District court of Luxembourg français
  • District court of Diekirch français
  • Composition with creditors to prevent bankruptcy français

Controlled management of a business

If you get into financial difficulty, you can opt to follow a controlled management procedure. To benefit from this, you need to send a request to the Commercial Court. The request must include a list of the company creditors as well as documents providing evidence that the company can be reorganised.

  • Safeguarding the business français
  • Applying for controlled management of a business français
  • Grand-Ducal decree concerning the establishment of the controlled management system pdf [67 KB] français
  • District court of Luxembourg français
  • District court of Diekirch français

Dismissal

You can make a request for partial unemployment. This must be sent before the 12th day of the month preceding the month during which the company wishes to lay off employees. It must be sent to the Economy Committee secretariat at the Ministry of the Economy and Foreign Trade.

  • Forms - Economy Committee   français
  • Requesting partial unemployment in the event of cyclical economic problems français
  • Requesting partial unemployment in the event of structural economic problems français
  • Requesting partial unemployment in the event of force majeure français
  • Requesting partial unemployment in the event of economic dependency français
  • Requesting additional support for continued vocational training in connection with partial unemployment français

Any employer who intends to dismiss at least 7 employees within 30 days or at least 15 employees within 90 days must make use of the mass redundancy procedure. To do this, he must:

  • inform the Employment Administration and the staff representatives;
  • negotiate a severance plan;
  • implement the severance plan;
  • where applicable, apply for tax exemption for the severance or dismissal payments.
  • Employment Administration français

Resources

Many sources of information for conducting market studies are available, such as the websites of the Chamber of Commerce and the Luxembourg Industry Federation.

  • Market studies of the Luxembourg Chamber of Commerce français
  • Directory of member industries of the Luxemburg Industry Federation français

To manage a company during difficult periods, you can use the data from the Central Service for Statistics and Economic Studies (STATEC). STATEC provides different information, including:

  • statistical information on the national structure and activities;   
  • economic and social accounts and balance sheets (global or sectoral);   
  • statistical data and study findings;   
  • economic forecasts (global or sectoral).
  • STATEC français

The business plan toolbox and the cross-border portal leguichet.org can help you anticipate difficulties, particularly by helping you to produce a business plan.

The Chamber of Trades provides an example set of key business indicators.

  • Key business indicators - Chamber of Trades français

             The Guichet entreprises business portal provides a wealth of information to entrepreneurs in difficulty.

  • Company in difficulty - Guichet entreprises français

Programmes

The Luxembourg government has set up direct support measures for companies to assist their financial recovery.

  • Applying for state aid or a state guarantee to assist financial recovery français

           VaccinAntiCrise   offers companies hit by the economic crisis a lifeline and support from experts selected by the professional chambers.

  • VaccinAntiCrise français
  • Obtaining support for your company from the VaccinAntiCrise initiative français

Check also the legislation on this topic in:

  • References

    Legal texts

    • Law of 30 June 2004 creating a general framework for support systems for SMEs pdf [68 KB] français
    • Grand-Ducal decree of 24 May 1935 on payment deferral, composition with creditors to prevent bankruptcy and bankruptcy under the controlled management system pdf [67 KB] français
    • Commercial Code pdf [88 KB] français
    • Labour Code pdf [3 MB] français

    Key documents

    • Liability of company directors français

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Further help

The SME Formalities Centre (Chamber of Trades) and Espace entreprises (Chamber of Commerce) offer professional help.

  • SME Formalities Centre français
  • Espace entreprises français