Improving debt collection – Publication of CSSF circular 22/819 – Insolvency/Bankruptcy

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Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 (the “Regulation”) establishing a European procedure for the preservation order of bank accounts in order to facilitate the cross-border recovery of debts in civil matters et commercial entered into force on January 18, 2017. Luxembourg law was amended in this respect by the law of May 17, 2017, as amended (the “Law”), which designates the regulator of the financial sector (the Financial Sector Supervisory Commission, hereinafter referred to as the “CSSF”) as the competent authority for the purpose of obtaining the necessary information on the debtor’s account(s), also referred to as the information authority within the Regulation. Circular CSSF 22/819 of 1 August 2022 contains certain information on this subject which is of interest to banks under the supervision of the CSSF.

As a reminder, the procedure created by the Regulation allows a creditor holding an enforceable title (enforceable title) such as a judgment, a court settlement or an authentic instrument which obliges the debtor to pay the debt of the creditor, or which will initiate or is in the process of legal proceedings to obtain such title, to request a preservation order (such as as defined in the regulations).

In accordance with Article 14 of the Regulation, a creditor holding an enforceable title who has reason to believe that the debtor holds one or more accounts with a bank located in Luxembourg, but does not know the name and/or address of the bank, nor the IBAN, BIC or other bank number identifying the bank, may ask the court dealing with its application for a preservation order to request, through the information authority of its Member State , the information necessary to identify the bank(s) and the debtor’s account(s) with the CSSF. The latter will transmit this request for information to all the banks under its supervision, which will provide the relevant data to the CSSF in the event that this debtor actually holds an account in their books.

This request for information is also available to creditors who do not yet hold an enforcement order when there is an urgent need for account information because there is a risk that without this information the subsequent enforcement of the claim of the creditor against the debtor is likely to be compromised, which may consequently lead to a substantial deterioration in the creditor’s financial situation.

From 1 September 2022, all communications between the CSSF and the banks under its supervision will take place via the dedicated eDesk portal.

Banks providing information to the CSSF on a debtor and/or his accounts opened in their books in response to a request for information inform the debtor that his personal data has been communicated.

However, the CSSF takes this opportunity to remind the banks that this information must not be provided within the first 30 days of the processing of the personal data, in order to avoid that a debtor, informed that a request for Preservation order has been introduced, organize its insolvency before the Preservation order has been issued and notified to the relevant account banks.

This communication procedure should have the advantage of simplifying and speeding up communication between banks and the regulator, and of improving the overall efficiency of the European account preservation order procedure.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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