Historically, little consideration appears to have been given to
the signature of comfort letters by Luxembourg parent companies.
The exposure of the company and its board members can be
significant depending on the wording used.
In this article, we examine the difference between a letter of
comfort and a guarantee – an important distinction in these
times of heightened distressed positions.
Comfort Letter or Guarantee - What did I just sign?
Historically, little consideration appears to have been given to
the signature of comfort letters by the boards of Luxembourg
holding companies, it having seemingly become something
"standard" that is simply requested by the auditors or
the suppliers of operating subsidiaries each year. However in these
times of increased distressed debt restructurings, the spotlight
should again be focused on these letters.
