AGEFI Luxembourg - avril 2024

Avril 2024 37 AGEFI Luxembourg Emploi / Droit By Olivier MARQUAIS, Senior Associate & Anis BENDIMRED, Associate, Loyens & Loeff Luxembourg W hen one’s interest is at risk further to the malfunctioning of the company and that this poses serious threats to the com- pany, investors may modify the decision-making and the man- agement of a company by seeking to judicially appoint a provisional director with a specific mission and for a tem- porary period. The principle and the conditions for the appointment The rule is that the company’s governing organs and bodies ensure its functioning, and that courts do not – in principle – intervene in its daily life ( principe de non-intervention ). When courts do in- tervene, their intervention is generally limited to severe situations where the urgency and neces- sity are clear. Thus, the judicial appointment of a provisional director is considered an exceptional measure. In order to appoint a provisional director, the re- questing party must have both standing and an interest in doing so. Since the court’s intervention seeks to preserve the company’s interests, on a curative and/or preventive basis, the company it- self (as a separate legal entity with legal personal- ity) and its organs are well placed to request the measure. Shareholders and, under limited condi- tions, creditors, may also request the appointment. The conditions for the appointment generally re- quire the requesting party to prove that the com- pany is no longer operating normally and that there is an imminent danger which poses a serious threat to the company. A company may be in an abnormal situation and may be deemed to mal- function if it is not possible to convene shareholder meetings, in the event of challenges to the validity of the composition of the company’s organs or the ownership of shares, further to the disappearance, deficiency or paralysis of the company’s govern- ing organs and bodies, etc. Requesting parties also need to demonstrate that inaction would lead to certain, imminent and ir- reversible damage, and that the malfunctioning poses a serious threat to the existence of the com- pany. Courts tend to assess the corporate interest ( intérêt social ) rather than the shareholders’ inter- est when deciding whether their intervention is justified. In practice, to stand the best chances of success, requesting parties typically bring for- ward examples of irregular management deci- sions, and illegal or possibly fraudulent acts, as well as the resulting damages to the company, in line with their interest to safeguard the value of their investment. Such irregular acts and decisions may include disregard for the company’s governing rules and decision-making process, the failure to con- vene shareholders’ meetings, the irregular ter- mination of managers’ mandates, the violation of the company’s articles of incorporation or other legal or contractual obligations, the lack of funds to meet the company’s obligations, the il- legitimate refusal to provide information to shareholders, the failure to meet obligations to creditors, etc. and other decisions taken against the corporate interest. The requesting party’s argument that irrepara- ble damage is imminent may be stronger if it can demonstrate that irregular decisions were made as well as the need for immediate cash influx. The appropriate forum and the legal basis Because the appointment of the provisional di- rector generally seeks to improve the state of cri- sis of the company on an urgent basis, the judge of summary proceedings ( juge des référés ) is an appropriate forum to bring the request. This ju- risdiction does not seek to address the merits of the issue on a permanent basis but rather orders urgent temporary measures to preserve rights, for example pending the final resolution of an internal crisis. In principle, nothing would prevent a party from requesting this measure as part of its de- mands in proceedings on the merits. In the con- text of corporate disputes, the intervention of the summary judge would need to comply with the principle of minimum interfer- ence in the company’s affairs and to be subsidiary in nature (“ principe du dernier recours ” or “ principe de non-inter- vention ”). Judicial intervention would generally only be tolerated when other modes of conflict resolution have failed, and that agreements are of no assistance. In support of its request when deal- ing with corporate and finan- cial disputes, it may be useful for the requesting party to demonstrate that the intervention of the summary judge is propor- tional to the situation it seeks to redress, that the benefit of the measure outweighs the prejudice suffered by the company and other stakeholders, that it is efficient, useful and that there is no other less damaging means to obtain redress. The scope and duration of the provisional director’s mission The judgment appointing the provisional direc- tor will determine the scope of its powers and the duration of its mission, which will be in line with the arguments brought forward by the re- questing party and the corporate interest. The provisional director will be vested with the powers conferred by law on the company’s managers, and will be responsible for managing the company in place of its directors for a speci- fied period. In doing so, the provisional director will have to protect a variety of interests, includ- ing of the company, the managers, the share- holders, the employees and in some cases, even third parties. The provisional director should al- ways be guided, first and foremost, by the cor- porate interest. In practice, requesting parties often define the desired scope and duration of the mission in their request, so as to guide the court to render the desired ruling. They may request that the court grants the provisional director wide pow- ers to actively manage the company and exercise powers which would otherwise belong to its board of directors, or perform very limited du- ties (such as convening a meeting of directors or shareholders or taking specific conservatory measures), depending on what is needed to pur- sue the company’s normal activities and its best interest, for the duration that is appropriate under the circumstances (for example until a transaction is finalized, pending the resolution of an internal dispute resulting in blocking the decision making or pending judgments on ques- tions of law concerning specific assets, etc.). There is in principle no limit as to the scope that the requesting party may suggest to the court. It may specifically request that the provisional di- rector be appointed to perform the dailymanage- ment and administrative duties of the company, ensure the preservation and enhancement of the value of its assets, take certain financial initiatives necessary to ensure that the company can meet its obligations, exercise voting rights, search for assets which would have been disposed of irreg- ularly and consider action to recover these assets, dispose of certain assets or prevent assets from being disposed of, etc. The requesting party may suggest the name of a provisional director candi- date in its application. Although courts enjoy large powers to define the role of the provisional director, they tend to limit these powers to what is needed to specifi- cally preserve the interests at risk. Thus, when the request is granted, requesting parties should expect the scope of the provisional director’s mission to focus on finding solutions to man- agement difficulties on the short and long term, and that the duration will be limited to what is strictly necessary to unblock the situation. The mere appointment of a provisional director is sometimes sufficient to ease the tensions be- tween shareholders and/or the organs of the company. The appointment of a provisional director re- sults in the managers of the company tem- porarily losing their prerogatives. In practice, this means they can neither manage the com- pany, nor act in its name. However, they re- main able to challenge the scope of the provisional director’s mission before the judge, either by appealing the initial decision to ap- point, or during the course of the provisional director’s mission if new relevant circum- stances have arisen. The law of 7 August 2023 on business preservation and the modernization of bankruptcy law Under Article 10 of the Law of 7 August 2023 on business preservation and the modernization of bankruptcy law, in situations of serious miscon- duct from the debtor or one of its organs, any interested third party (or the public prosecutor) may petition the presiding judge of the district court ( Tribunal d’arrondissement ) sitting in com- mercial matters and as in summary proceed- ings, to appoint one or more judicial representatives ( mandataires de justice ). The order appointing the judicial representative shall define the scope and duration of its powers and mission. In the absence of case law on point, it remains uncertainty whether and how its role, function and utility will differ from a provi- sional director’s. Part 2 Procedural tactics in Luxembourg corporate and financial disputes: The appointment of a provisional director (administrateur provisoire) Par Philippe-Emmanuel PARTSCH* D epuis plus de 60 ans, le projet européen est un catalyseur de la prospérité, de la démocratie et de la paix sociale.Aujourd’hui, s’il suscite encore de grands espoirs, son moteur semble grippé, comme l’atteste notre déclin sur les plans technologique, économique, financier et éducatif. Ceci est d’autant plus préoccupant que les défis semultiplient : concur- rence croissante de pays tiers, réchauffement et au- tres préoccupations environne- mentales, risques géopolitiques. Comment arrêter l’hémorragie et inverser la ten- dance ? Comment maximiser la construction euro- péenne dans son état actuel en vue d’accroître la prospérité(12,5%dePIBdepluspourles27),apaiser lestensionssociales,renforcernosdémocraties,deve- nir plus écoresponsables, bâtir une défense com- munemoins dépendante des Etats-Unis ? C’est l’objet de ce captivant essai, fondé sur une connaissance approfondie et une expérience variée de la construction européenne. Il est articulé autour decinqthèmes,les«Travaux»quel'Auteur assigneàl’Europepoursauvervoireamé- liorer notre modèle et notre qualité de vie). L’essai aborde successivement : la prospérité,développementetsolidarités, l'écoresponsabilité, démocratie et liber- tés, les politiques extérieures. A travers ces prismes sont développées des approches et solutions innovantes de nature à façonner et sécuriser notre avenir. Notamment, n’étant à ce jour pas un Etat ou un super-Etat, et devant faire ce qu’un Etat n’est pas à même de réaliser seul, l’Unioneuropéennedoitagirautre- ment et être complémentaire aux Etats membres. L'auteur montre que les marges de progression sont substantielles dans une série dedomaines.Untravailméthodiquede l’Union européenne sur son action propre ainsi que sur l’influence positive qu’elle peut exercer sur celle des Etats membres devrait enclencher une dynamique durable. Ce, sans imposer des sacrifices notablesàlapopulationnilecaséchéant,sansrequérir demoyens supplémentaires. Au passage, le cou est tordu à certains canards (l'Europen'estpasultralibérale,lesecteurpublicrepré- sentant enmoyenne 50%du PIB). Des préjugés sont redressés(ungrandmarchéréellementintégrépermet auxentreprisesd'êtreplus sociales et plus écorespon- sables compte tenu des débouchés plus importants procurés ; économie demarché et interventionnisme public ne sont pas antinomiques mais doivent être coordonnés). Cet ouvrage renferme notamment une sériederecommandationsprécises,susceptiblesd’ins- pirer les institutions européennes. Au-delà d’atouts majeurs (comme un marché géo- graphiquement très compact) dont elle doit mieux jouer, l'Europe apparaît plus largement comme un rehausseur et un levier : elle peut faire grandir la population, les entreprises, les Etats membres ainsi qu'elle-même envue d'une augmentationdes possi- bles et de la qualité de vie. * Fondateur de la pratique de droit européen d’une des plus importantes études indépendantes d’avocats du Continent, Philippe-Emmanuel Partsch a également été référendaire à la Cour de justice de l’Union européenne. Professeur, il enseigne le droit bancaire et financier européen à l’Université de Liège et à celle de Paris II. L'auteur est bien connu des lecteurs de Agefi Luxembourg, dont il est un contributeur régulier. L’essai fait 384 pages. Il est disponible en version française depuis le 17 avril2024etleseraenversionanglaiseàpartirdu30avril.Publiéparles EditionsConcurrencesetinaugurantleurnouvellecollectiond’essaisQuo Vadis Europa ?, il peut être commandé sur leur site Internet (www.concurrences.com ) ou via la plupart des librairies, au prix de 25 euros. Le lien suivant amène à la page du livre et permet désormais sa pré-commande :https://www.concurrences.com/fr/all-books/118151. Les 5 travaux d’Europe Une Europe qui nous fera grandir LES VA5TR AUX D’EU NOUS F UNE EU ROPE ERA GRAN ROPE QUI DIR PHILIPPE-EMM TSCH AR ANUEL P