Administrative Dissolution Without Liquidation Now Possible In Luxembourg

On 18 October 2022, the Luxembourg Parliament passed a law (the "Law") introducing an administrative proceeding by which a company may be dissolved without liquidation (procédure de dissolution administrative sans liquidation) (the "Administrative Dissolution Proceeding") at the request of the Public Prosecutor (Procureur d'Etat). The Law is the first part of the largest-ever reform to modernise Luxembourg bankruptcy law.

Objective of the Administrative Dissolution Proceeding

The Administrative Dissolution Proceeding allows for certain companies to be dissolved through an administrative proceeding without resorting to formal judicial dissolution and liquidation, in cases where the company has breached criminal laws, the Commercial Code or the laws governing commercial companies. In particular, the Administrative Dissolution Proceeding is intended to prevent the prolonged existence of so-called "zombie" companies.