MOLITOR looks at cash pooling and insolvency in Luxembourg
This extract, written by Laurent Fisch, partner at MOLITOR Avocats à la Cour, focuses on cash pooling and insolvency in Luxembourg.
The laws of the Grand-Duchy of Luxembourg do not explicitly address cash pooling agreements. Agreeing and implementing either notional or physical cash pooling agreements (or any other agreement in the absence of a legal framework) is a basic citizens’ right that is subject merely to the limitations arising from legal rules.
There is no reliable source of information on the types, use and importance of cash pooling agreements in Luxembourg or by Luxembourg company groups. Notional and physical cash pooling agreements covering a number of denominations are known to exist, and several larger local company groups use cash pooling in a purely domestic context.
Local bankers tend to see cash pooling agreements as a banking product offered mainly by global competitors which have a presence in many jurisdictions and/or easy access to a group’s head management and chief financial officer…
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