Amendment Of The Luxembourg 2005 Collateral Act

On May 12 2011, the Luxembourg Parliament passed bill 6164, which implements the E-Money Directive (2009/110/EC) and the Directive 2009/44/EC amending the Settlement Finality Directive and the Collateral Directive. The new law (i.) revises the legislation on e-money institutions and aims to create a more innovative and balanced framework for the creation of new related services and (ii.) amends the 2005 Collateral Act.

Most of the amendments regarding the 2005 Collateral Act reflect provisions already used in existing collateral arrangements, where they currently apply on a strictly contractual basis. Like the 2005 Collateral Act, the new law is very creditor-friendly; it seeks to enhance the legal security of the creditor's position when taking collateral, and to ensure that such collateral is effective and bankruptcy-remote.