The 22nd of April 2009 brings in significant changes to rules relating to arrestment and actions of furthcoming. The Bankruptcy and Diligence etc (Scotland) Act 2007 (Commencement No. 4, Savings and Transitionals) Order 2009 brings into force Section 10 of the 2007 Act which inserts Part 3A into the Debtors (Scotland) Act 1987. The provisions coming into effect include:

Whether you are interested in purchasing assets or a going concern, bankruptcy court can be a land of opportunity. Assets may be sold by a trustee, or someone the trustee retains, in a Chapter 7 liquidation, or by a Debtor-in-Possession (a “DIP”) in a Chapter 11 reorganization case. In either case, you should expect a competitive bidding process. Going concerns are typically sold in Chapter 11 cases where the debtor determines, often after trying to reorganize, that it lacks the resources to reorganize and continue operating.

On 22nd April 2009, some significant changes to debt recovery legislation are due to come into force, affecting the procedures relating to inhibitions in Scotland. The provisions are a further step in the implementation of changes which are designed to make the debt recovery process more 'user friendly'. Part 5 of the Bankruptcy and Diligence etc (Scotland) Act 2007 brings about the following changes/clarifications:

When a company files bankruptcy, it is crucial to closely monitor the bankruptcy proceedings from the beginning. After filing its petition, the debtor will likely file numerous “first day motions” intended to stabilize the Debtor’s business and facilitate an efficient case administration. These motions can severely affect the rights of unwary creditors who may find their interests primed by the actions of the debtor in the first few days of the case.

In April 2008 the Bankruptcy & Diligence (Scotland) Act 2007 ("the Act") introduced a new regime for obtaining permission for (and recalling) diligence on the dependence of a court action (i.e. arrestment and inhibition). In terms of the Act, before granting (or recalling) warrant for diligence, the court must be satisfied that:

With administrations and liquidations on the rise, companies may well-find that they occupy premises under a sub-lease where their immediate landlord has become insolvent and we look at their rights and how the position differs north and south of the border.

Pre-pack sales continue to attract attention and create controversy. A pre-pack occurs when a deal is agreed for the sale of the business and assets of a struggling company prior to formal insolvency proceedings being instigated. The purchase is effected upon the appointment of the insolvency practitioner and the purchaser is very often a vehicle in which the directors/shareholders have a stake.

The purchase of off-site materials has always been an area fraught with risk for contractors and employers; even more so with the increasing threat of supplier insolvency.