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ARTICLE · 04 AUGUST 2026

A Major Boost For Funded Sub-participations In Luxembourg

A&O Shearman
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Bill of Law No. 8813 introduces a statutory asset segregation regime for funded sub-participations in Luxembourg, materially improving participant protection by reducing exposure to lender insolvency risk. The reform is expected to increase the attractiveness of Luxembourg-based lending structures across loan, private credit, and structured finance markets.

LuxembourgFinance and Banking
A&O Shearman
A&O Shearman
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Bill of Law No. 8813 marks an important development for Luxembourg’s financing market. By introducing a statutory asset segregation regime for funded sub-participations (sous participations en trésorerie), the proposed legislation will materially improve participant protection and reduce exposure to lender insolvency risk.

The reform is expected to increase the attractiveness of Luxembourg-based lending structures across the loan, private credit, and structured finance markets.

1. Purpose of the bill

Funded sub-participations are commonly used where a participant funds its share of an underlying loan and becomes entitled to receive a corresponding portion of amounts repaid by the borrower to the lender.

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