Myriam Detourbet and Théo Klein (Atoz Governance Services): Liquidation, a sign of maturity

Myriam Detourbet, Head of Liquidation Services, and Théo Klein, Assistant Manager, Liquidation Services, at Atoz Governance Services, explain why voluntary liquidations keep rising in Luxembourg and how boards should prepare.

Why is voluntary liquidation becoming a growing field in Luxembourg?

Luxembourg's CSSF-regulated fund liquidations have been rising by 10% over the past years. Including liquidation of unregulated companies, these figures point to a clear increase. Far from a sign of failure, this trend reflects financial maturity and an understanding of when and how to close a structure efficiently. This evolution is explained by several key factors: first, funds naturally reach the end of their pre-defined lifecycles, then the fund may face significant redemptions that drop below economically viable thresholds and force it to liquidate. Additionally, winding down a fund will significantly reduce ongoing costs (operational, regulatory expenses…). More recently, geopolitical fallout and conflicts may also encourage managers to reconsider existing structures by liquidating. Ultimately, Luxembourg's flexible legal framework supports this environment by offering both structured liquidations and simplified dissolutions for single-shareholder entities. This robust system ensures managers can wind down operations efficiently, preserve remaining value, and return capital to investors safely.

Far from a sign of failure, this trend reflects financial maturity.

How does closing a company or a fund work, in practice?

The voluntary liquidation of a fund begins with the extraordinary general meeting of its shareholders, which resolves to put the fund into liquidation and appoints the liquidator with the broadest powers provided by law. The main mission of the liquidator is to realise the fund's remaining assets and settle its liabilities. This includes reviewing and terminating service provider contracts and establishing a comprehensive liquidation budget. Although the fund is in liquidation, it continues to exist for the purposes of its liquidation, allowing essential service providers to continue operating and cooperating with the liquidator until the liquidation is completed. Throughout the process, the liquidator acts in the best interests of investors. Once all assets have been realised, the liquidator prepares its report, including the liquidation accounts and a description of the actions undertaken. The report is submitted to shareholders during a general meeting for approval, together with a proposal to close the liquidation.

As liquidations continue to rise, what should boards and fund sponsors prepare for in the years ahead?

As corporate liquidations and fund closures continue their multi-year upward trajectory, boards and fund sponsors should prepare for processes that are becoming increasingly complex. Early planning will be key: boards should ensure that the fund's documentation, contractual arrangements, assets, liabilities and service-provider relationships are fully mapped, with sufficient resources and a realistic liquidation budget in place. Clear governance and communication with investors, service providers and relevant authorities will be essential throughout the process. Given the increasing complexity of liquidations, boards and sponsors should anticipate regulatory and operational expectations. In this respect, the CSSF is currently preparing a circular dedicated to good practices for non-judicial liquidations. This should provide useful guidance and a valuable framework for boards, sponsors and other stakeholders when preparing for and managing a liquidation. Ultimately, preparing well before the decision to liquidate should help ensure an efficient and transparent process, while reducing execution risks and protecting investors' interests.