The Luxembourg legislator introduced the new law of 22 July 2022 (the 2022 Law) amending the law of 5 August 2005 on financial collateral arrangements (loi du 5 août 2005 sur les contrats de garantie financière) in order to, inter alia, modernize certain provisions relating to the enforcement of financial collateral by way of public sale.
The updates in that regard (cf. new Art.11(2)) aim chiefly to provide more detailed (though suppletive – as the parties may still provide otherwise) rules in respect of the organization, process and effects of the public sale as an enforcement procedure in respect of financial collateral arrangements.
The parties’ retained freedom to contractually provide their own arrangements in these respects, and the further clarity/details in case they choose not to, are both welcome developments.
In addition to the objective of modernizing the various methods of enforcing the collateral, the 2022 Law has introduced new provisions to clarify enforcement measures for assets of a particular nature, such as units or shares in collective investment undertakings or insurance policies, but also updated certain provisions relating to transfer of title, set-off and insolvency proceedings, etc.
