Analysis of court decisions rendered in 2024 and 2025 in respect of the law of 7 August 2023 on the preservation of businesses and the modernisation of insolvency law
The 2019 Directive on restructuring and insolvency (the Directive) provides Member States with a number of options in terms of transposition, including the formation of voting classes, the classification of secured and unsecured claims, and who may vote on a plan. The law of 7 August 2023 on the preservation of businesses and the modernisation of insolvency law (the 2023 Law) adopts an approach that may lead, in some respects, to complications in the preparation and the adoption of a plan, notably because the 2023 Law provides only two voting classes, produces a de facto absolute‑priority outcome for dissenting secured creditors in cram‑down, omits an express bifurcation rule for under‑secured claims, contains no exclusion from voting for subordinated or related‑party creditors, and imposes a double majority (headcount and amount) within each class.
Certain decisions of the Luxembourg District Court rendered in 2024 and 2025 show the practical application of the 2023 Law, as described below.
Luxembourg’s 2023 Law implements the EU Restructuring Directive with only two voting classes, which may compress creditors with materiality divergent interests into the same class.
I. The implementation of the Directive by the 2023 Law
The Directive requires that affected parties be grouped into classes reflecting a sufficient commonality of interest on objective and verifiable criteria and, at a minimum, that secured and unsecured creditors vote in separate classes (Article 9.4). The 2023 Law provides only two classes, ordinary stayable creditors (CSO) and extraordinary stayable creditors (CSE). The CSE are defined in the 2023 Law as creditors holding claims secured by a special lien or mortgage, retention-of-title creditors’ claims, as well as stayable claims of tax authorities and social security agencies whilst the CSO are stayable creditors other than the CSE (Article 1).
This approach may, from an economic perspective, group heterogeneous creditors into two classes. As noted in literature[1], secured creditors’ positions vary by collateral type, value, lien rank, and coverage. A single unsecured class may also group senior and contractually subordinated lenders, bondholders, trade creditors, and small claimants alongside large institutions. Creditors with materially divergent interests may therefore vote together in one class.
The 2023 Law additionally permits categories within each class with differentiated treatment, subject to two requirements: (i) equal treatment within the category and (ii) proportionality to the amount of claims in that category (Article 43(2)). Voting, however, is tallied at class level, as the 2023 Law provides no separate vote by category (Article 49).
Categories allow differentiated economics for sub‑groups, but their votes are aggregated at class level, which can complicate approval.
The statutory definition of CSE lists mortgages and special liens but does not expressly mention pledgees. Given that a pledge is a security right in rem, in light of the Directive’s minimum split between secured and unsecured creditors, pledgees affected by a plan should be treated as CSE. Separately, it is commonly held that a pledge governed by the law of 5 August 2005 on financial collateral is immune from the reorganisation procedure and therefore that pledge could be enforced without being affected by such procedure. As a result, a pledgee that can and intends to enforce outside the plan should not be an “affected” party and should therefore not vote[2].
In practice, a plan is rarely viable if key pledged assets (typically shares in a subsidiary) are at real enforcement risk and hence a debtor would likely not even consider filing such a plan. The CSE characterisation of a pledgee should come into play in a scenario in which secured creditors elect to restructure through a plan rather than enforce (e.g., in syndicated financings).
The Directive permits Member States to calibrate secured status to collateral value by bifurcating an under‑secured claim into (i) a secured portion up to collateral value and (ii) an unsecured deficiency, i.e. the bifurcation rule. The 2023 Law does not expressly adopt this option. As one scholar notes, given the silence of the 2023 Law and the lack of precedent, it is uncertain whether an under‑secured claim is CSE only up to collateral value, with the balance treated as CSO[3].
The 2023 Law requires, for each class, that there is a majority in headcount and at least 50% of the principal of uncontested or provisionally admitted claims. In homogeneous classes this can be a sensible safeguard against domination by a single large creditor. In two heterogeneous classes, headcount can magnify the influence of many small or related‑party claims. In this respect, it has been rightly noted that the interests of small or otherwise vulnerable claimants could be better protected with the tool of formation of separate class[4].
The Directive permits either a relative or absolute priority approach in cross‑class cram down (Articles 11.1.c and 11.2). Under the 2023 Law, a de facto absolute priority rule is applicable because dissenting CSE must be paid in full if CSO receive anything[5].
Finally, the Directive allows Member States to exclude the votes of related parties with conflicts of interest and contractually subordinated creditors (Articles 9. 3. (b) and (c)). These options have not been transposed in the 2023 Law. The consequence is that subordinated creditors and intra‑group lenders may vote in the CSO class.
II. Case law analysis
A. Intra‑group creditors
In its decision of 19 December 2024 (TAL‑2024‑03607), the court examined a plan submitted to both classes. Among the CSO, the plan included a category of intra‑group creditors who would waive almost the entirety of their claims in exchange for a symbolic EUR 1. The court held that these creditors were not “affected” by the plan within the meaning of Article 48 of the 2023 Law because of this waiver. The court also incidentally characterised their conduct as a voluntary renunciation in contradiction with their own corporate interest, and referred to the Belgian doctrine of auto‑affectation whereby one shall be wary of a creditor that voluntarily engineers its own “affectation” to influence the ballot. External CSO (i.e., not related to the debtor) voted, almost unanimously, against the plan, and this underscores that including the intra‑group votes could have distorted the class outcome.
Article 48 of the 2023 Law allows only affected stayable creditors to vote. In the same decision, the court decided, in respect of another category of creditors to be immediately paid in full, that a creditor whose claim was neither reduced nor rescheduled nor staged was not affected and hence decided rightly that these creditors were not affected by the plan. Treating intra‑group waiver creditors as “not affected” does not appear to be consistent with the interpretation of an affected creditor. The waiver is indeed a component of the plan, stipulated therein and effective only upon confirmation. If the plan is not confirmed, the waiver does not materialise and the claim subsists in full. Therefore, those creditors’ rights are obviously modified by the plan.
In our view, the court’s reasoning should be understood as a pragmatic response to the absence of an express exclusion of related parties from voting pursuant to Article 9.3(c) of the Directive in a narrow situation. As an aside, the debt waiver should not have been the subject of criticism given this is common in a restructuring plan, which is to the benefit of external creditors.
However, in the absence of an express statutory exclusion of related parties, turning to a Belgian court precedent of 2023 which neutralised the negative vote of certain creditors based on an abuse of rights[6], that mechanism could possibly be considered in a scenario involving related parties but the threshold would certainly be very high.
Luxembourg’s 2023 Law does not adopt the bifurcation rule for under-secured claims, leaving uncertainty whether the secured portion is treated as CSE and the deficiency as CSO.
B. Categories and classes
Two decisions rendered in 2025 illustrate that plans may create multiple categories within each class with differentiated treatment, provided creditors are treated equally within each category and proportionately to their claim amounts, and that voting results are tallied at the class – not category – level.
A decision rendered on 22 May 2025 (TAL‑2024‑03627) applied this framework to CSO categories with ascending maturities and, for the largest claims, a discount over time. Then, a decision rendered on 27 November 2025 (TAL‑2024‑09043) applied it to CSE categories corresponding to different German‑law real estate securities, one repaid in full and the other receiving residual proceeds after the first and the CSO. In both cases, the court did not raise any issue in respect of the categorisation of creditors based on the requirements of equal treatment and proportionality under paragraph 2 of Article 43 of the 2023 Law and the plans were approved following an approval at the class level.
By contrast, in the December 2024 decision, the plan had foreseen four categories of creditors but did not make any distinction between CSE and CSO. The court emphasised that creditors voted at the class level and not category level and the votes were assessed accordingly.
The November 2025 decision also illustrates that the 2023 Law does not expressly provide for an exclusion of the votes of under-secured creditors. In this case, the debtor owned a single encumbered property with a market value materially below the secured stack. It appears that one CSE category may have been economically under‑secured and thus out of the money. The decision mentions that the CSE and CSO unanimously cast a favorable vote, their claims representing 100% of all claims and taken into account for the calculation of majorities. That decision therefore does not appear to have characterised the under-secured creditors at least partly into CSO.
In our view, it remains to be seen what solution would be adopted by the court in the scenario of a contentious restructuring in which the characterisation of under-secured creditors as CSE or CSO would be debated between the debtor and the creditors. In this respect, arguments could be certainly built upon the fact that, to the extent that it can be established, the value in the case of enforcement of the security shows that the creditors benefiting from that security are under-secured, that portion of the claim shall be characterised as CSO, as from an economic standpoint, it has no economic value as a secured claim. On the other hand, that type of argument is uncertain given that the 2023 Law does not expressly make such distinction. It is worth noting a controversy took place on that subject for years in Belgium over the last decade[7], the 2023 Law being primarily inspired by Belgian legislation passed in 2009 and 2013. Now, the Belgian law of 7 June 2023 implementing the Directive expressly applies the bifurcation rule[8].
To generally address the heterogenous nature of the classes of creditors, one could consider including directed voting provisions in intercreditor agreements, under which junior creditors undertake to vote in favour of any restructuring plan that the senior creditors accept. Intercreditor agreements may indeed include provisions for relevant creditors to exercise their voting rights in a certain way in restructuring proceedings[9]. The enforceability of such provision in the context of a Luxembourg judicial reorganisation is untested, but such covenants could potentially reduce the risk that junior votes in a single class frustrate a plan that respects the agreed waterfall.
Luxembourg’s 2023 Law allows multiple categories within each voting class with differentiated treatment, but voting is aggregated at class level rather than by category.
C. Best interests of creditors
Under the 2023 Law, the court shall apply the best interests of creditors test only if a creditor challenges that such test is met in a reasoned manner (paragraph 7 of Article 49 and Article 50). The 2023 Law provides that the plan satisfies the best interests of creditors test in that no creditor is left worse off under the plan than it would be if the normal order of priorities were applied, whether in the case of bankruptcy or judicial liquidation, or in the case of the next best alternative, if the plan were not confirmed (paragraph 3 of Article 43).
In the decision rendered on 25 September 2025 (TAL-2025-01208), the plan offered CSO 10% and claimed only 4.4% would be recoverable in bankruptcy. A CSO creditor challenged the complete lack of evidence regarding the alleged recoverability of the CSO. The plan having been approved by the CSE, the court determined, in the context of the application of the cross-class cram down, that the debtor actually failed to provide evidence of the recoverability figure of the CSO. It is worth noting that the court held that the debtor provided no assessment of the dismantlement value of its assets, whether the net asset value of isolated assets, the overall value of a business transfer, or even the going-concern value established by projecting into the future the present value through the effect of the plan.
In a decision rendered on 13 October 2025 (TAL-2024-07754), the case related to a plan providing for a partial payment of the only CSO, to be financed by a third party, and the CSE being paid in full. The debtor alleged that the only asset was an indirect claim held by the parent company, evidenced by a foreign judgment the enforcement of which would require costly and uncertain action abroad, whilst the creditor argued that it would be in a better position if the company were bankrupt. As part of the application of the cross-class cram down, the court found that bankruptcy would likely produce nothing for CSO, whereas the plan delivered partial, staged distributions financed from external funds and hence, the test was satisfied and the plan homologated.
In a decision rendered on 6 November 2025 (TAL-2025-05408), the court homologated a plan with CSO approval and CSE dissent after verifying that dissenting CSE, composed exclusively of public creditors, would be repaid in full (principal and interest) over a defined period and that, in the scenario of the debtor’s bankruptcy, based on the available accounting information, they would likely not be repaid in full. The court also determined that CSE were treated more favourably than CSO (who accepted a substantial haircut over a longer duration), which illustrates the actual application of the de facto absolute priority rule.
If these decisions illustrate that Luxembourg courts verify that sufficient valuation evidence be provided, it also shows that the judicial debate on valuation will take place at the last stage of the homologation of the plan, which can create some uncertainty for the parties involved[10].
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[1] See INSOL Europe, Guidance Note on the Implementation of Preventive Restructuring Frameworks under EU Directive 2019/1023: Claims, Classes, Voting, Confirmation and the Cross-Class Cram-Down, Tomáš Richter & Adrian Thery (April 2020), available at https://ssrn.com/abstract=3575511, n° 52
[2] Thomas Mastrullo, “Transposing the Directive (EU) 2019/1023: The new Luxembourg preventive restructuring law”, European Insolvency and Restructuring Journal (EIRJ), 2024-4, n° 106
[3] T. Mastrullo, op. cit., n°119
[4] T. Richter and A. Thery, op.cit., n° 82
[5] T. Mastrullo, op. cit., n° 128
[6] Tribunal de l’entreprise du Hainaut, div. Charleroi (RG Q/21/00072), quoted in Nicolas Ouchinski, La procédure de réorganisation judiciaire par accord collectif pour grandes entreprises et les classes de créanciers, available at : https://blog.oeccbb.be/fr/article/la-procedure-de-reorganisation-judiciaire-par-accord-collectif-pour-grandes-entreprises-et-les-classes-de-creanciers/29553
[7] See for example Bernard Leroy, Créancier et réorganisation judiciaire, Forum Financier Belge Comité de Verviers Eupen, Séminaire du 18 février 2016, p. 5 and seq. https://www.financialforum.be/sites/financialforum.be/files/media/1660E%20B.%20Leroy.pdf
[8] The Code of economic law (Code de droit économique) has been amended by including article XX. 75/2 and article XX.83/9 for such purpose.
[9] Mika J. Lehtimäki, Intercreditor Agreements in Leveraged Buyouts (D.Phil. thesis, University of Oxford, 2020), pp. 225–226
[10] This issue has been stressed in a decision rendered by the Tribunal de l’entreprise Liège, division de Namur (4e chambre), dated 23/01/2024, J.L.M.B. 24/080, n°104
This article is reproduced from the International Insolvency and Restructuring Review 2026/27, published by Beaumont Capital Markets Ltd in June 2026.