Over the past 20 years, investments into debt have become increasingly more popular. A sub-category of debt investments are investments into distressed debt, which are an important niche market which soared over the last decade, contributing to the Grand Duchy’s success as a prime location for Alternative Investments.
Broadly speaking, investments into distressed debt rely on the acquisition of non-performing loans or other distressed debt instruments at a price below par value. Thereafter, the idea is to realize capital gains upon the disposal or repayment of the debt instrument once the financial situation of the debtor improves.
Investments into distressed debt may be made via different investment vehicles including, in particular, Luxembourg companies, securitization vehicles and funds, or a combination thereof. In some cases, investments may also involve foreign investment vehicles (for example, a local securitization vehicle).
The choice of the optimal investment platform may depend on several factors such as the preferences of the investors, requirements from the perspective of the investment jurisdiction(s), constraints from a regulatory perspective and the magnitude of the investment.
This briefing will provide participants with a clear view on how investments into distressed debt may be made in Luxembourg and consider substance and transfer pricing aspects as well as potential reporting obligations under the mandatory disclosure regime (DAC6).
- Regulatory considerations
- Luxembourg investment vehicles to invest into debt
- Luxembourg funds
- Luxembourg companies
- Luxembourg securitisation vehicles
- Luxembourg investment platforms for investing into debt
- Combination of Luxembourg vehicles
- Combination of Luxembourg and foreign vehicles
- Substance requirements
- Transfer pricing considerations
- The mandatory disclosure regime (DAC6)
More information and registration here.