Luxembourg

Security interest law in Luxembourg

1. Can an intercompany guarantee be granted?

1.1 Upstream?	Yes, under certain conditions (best corporate interest, corporate purpose and considering the financial capacity of the guarantor).
1.2 Downstream?	Yes
1.3 Lateral?	Yes, under the conditions above.
2. Can a guarantee be given under foreign law (e.g. English law)?	Yes
3. Any special arrangements (e.g. to deal with transfer pricing/corporate benefit)?	Corporate benefit derived from the transaction. Financial capacity of the guarantor.

4. Can a security interest be granted in the following type of asset?

4.1 Real property	Yes
4.2 Shares (privately held)	Yes
4.3 Shares (marketable securities)	Yes
4.4 Receivables	Yes
4.5 Bank account	Yes
4.6 IP/Trademark	Yes
4.7 Equipment/Plant/Machinery	Yes
4.8 Inventory	Yes
4.9 Insurance	Yes
4.10 Rights under a contract	Yes
5. Can security interests be granted to a foreign lender?	Yes
6. Can multiple security interests be granted over the same asset?	Yes
7. Can a security interest be granted to secure liabilities of a holding company, a subsidiary or any other affiliate?	Yes

8. In order to be enforceable against third parties, must a security interest be?

8.1 Notarised?	No, except mortgages.
8.2 Registered?	Yes
8.3 Other?	N/A
9. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the secured asset?	Yes
10. Is there any stamp or similar tax or duty payable on the security document?	No, except mortgages, pledges on real estate or pledges on a going concern.

11. For a security interest to be legally enforceable which items must be filed as part of the registration or notarisation process?

11.1 Entire security agreement?	No, except mortgages.
11.2 Names of pledgor and pledgee?	Yes
11.3 Description of secured asset in general terms?	Yes
11.4 Description of each individual secured asset?	Yes
11.5 Documents concerning ownership of secured asset?	No
11.6 Documents concerning debt in respect of which the asset is being secured?	No

12. Can a right to enforce security arise:

12.1 When the secured debt is unpaid and due?	Yes
12.2 When there is some other breach of the pledge/security agreement?	Yes
12.3 When the debtor becomes insolvent?	Yes
13. Can the creditor enforce its security interest by taking possession of the asset and selling it without court assistance?	Yes, there are several methods of enforcement.
14. Is an instrument for direct enforcement necessary/available/market practice?	No
15. Are powers of attorney to the secured party used to facilitate a sale of secured assets in an enforcement situation?	Yes
16. If a sale is permitted without court assistance does it have to be made by public auction?	No, a private sale is possible.
17. Can a transfer of all or part of the debt be made without affecting the security over the assets?	Yes
18. Is there anything else of which a lender should be aware as unusual or particularly difficult?	No, the Luxembourg Financial Collateral Act is deemed to be lender friendly.