Venezuela's socialist government has ordered the takeover of Seguros Federal, a local insurance company that was part of a financial group under investigation for reported insolvency issues.

The decree issued in Official Gazette No. 39,580 on December 23, 2010, provided for the "forced acquisition" of all of Seguros Federal's assets. The assets will be used by the government to build its Socialist System of Insurance Activity which aims to provide insurance products to the poorest sectors of society.

On 14 December 2010 the English Court sanctioned four connected schemes of arrangement for German companies in the Tele Columbus group.

Pursuant to § 1104 of the United States Bankruptcy Code, the court may appoint a bankruptcy examiner to investigate the debtor with respect to allegations of fraud, dishonesty, incompetence, misconduct or mismanagement. A qualified examiner, with a clearly defined mission, can drastically affect the outcome of the bankruptcy case and directly impact the return to creditors. The difference between a successful financial restructure or liquidation and an investigation yielding little value to the creditors often depends on the approach taken by the examiner and his professionals.

In November of 2010, the trustee for the Circuit City Stores, Inc., liquidating trust filed more than 500 adversary proceedings against creditors seeking the recovery of alleged preferential payments. The extent of the trustee's success in recovering these payments will impact the overall distribution to creditors. Creditors in bankruptcy cases should be aware that preference litigation allows a trustee or debtor-in-possession to recover payments received by a creditor during the period immediately preceding the bankruptcy filing.

In the case of banking institutions dealing with the unique world of insurance insolvency, the results may not be as dramatic as in other cultural clashes, but they can be equally confused. This is because insurance insolvency operates in its own separate world, where the usual rules of bankruptcy do not apply and where, without appropriate safeguards, having a secured claim may not guarantee repayment. For banks and other secured creditors, lending to insurance companies is governed by a separate set of rules to which careful attention must be paid.

The U.S. Bankruptcy Code provides for the appointment of a bankruptcy examiner to investigate the debtor with respect to allegations of fraud, dishonesty, incompetence, misconduct or mismanagement. The right examiner, with a clearly defined mission, will have a major influence on the bankruptcy process. The difference between a successful financial restructuring or liquidation-resulting in substantial recoveries for the key constituencies-and a time-consuming (and asset-consuming) meltdown, can depend on the approach of the examiner and the examiner's support team.

The United States Supreme Court declined to review a Second Circuit decision wherein a bankruptcy trust fund established to reimburse asbestos victims while barring them from future lawsuits against insurers was held to not apply to Chubb Indemnity Insurance Co. In the underlying matter, Chubb sought contribution for asbestos injury claims from The Travelers Indemnity Co. The trust was established in 1986 by a bankruptcy court and funded with hundreds of millions of dollars from insurers for the benefit of asbestos claimants and their families.

As previously discussed here, Ambac Financial Group Inc. has filed for bankruptcy for Chapter 11 bankruptcy relief with United States Bankruptcy Court for the Southern District of New York. Immediately following its bankruptcy filing, Ambac sued the United States to block the Internal Revenue Service from placing a lien on its assets in an attempt to recover an estimated $700 million in tax refunds that the agency believes it may be owed.

As we first covered here, Ambac Financial Group Inc., the parent of the ailing Wisconsin-domiciled bond insurer Ambac Assurance Corp., filed for Chapter 11 bankruptcy relief with United States Bankruptcy Court for the Southern District of New York on November 8, 2010.

In another instalment of the Scottish Lion saga (see our previous blog entries here, here and here) the Outer House of the Court of Session (the Scottish First Instance Court) has ruled that where a scheme creditor submits documents in support of his claim fo