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:

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:

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.

The Sixth Circuit recently held that section 2-702(3) of the Uniform Commercial Code (the "UCC"), which permits good faith purchasers to defeat a valid right to reclaim, does not allow a secured creditor to defeat that right.[1] The Sixth Circuit found that the security interest held by a DIP lender could not be used to defeat the right of a reclaiming creditor under the UCC or pre-BAPCPA section 546(c) of the Bankruptcy Code. This decision may impact the way bankruptcy courts consider reclamation claims under revised section 546(c) of the Bankruptcy Code.

In the very early hours on September 20, 2008, the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") entered an order (the "Sale Order") approving the sale of substantially all of the assets of Lehman Brothers Holdings, Inc. ("Lehman"), LB 745 LLC and Lehman Brothers, Inc. (collectively, the "Lehman Sellers") to Barclays Capital, Inc. free and clear of all liens claims, encumbrances and other interests.

As has been widely reported, on September 15, 2008, Lehman Brothers Holdings, Inc. ("Lehman") filed for protection under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). Except for LB 745 LLC which is the Lehman entity that was formed to own Lehman's headquarters in New York, the other subsidiaries (the "Lehman Subsidiaries") of Lehman have not filed for bankruptcy protection as of the time of publication of this Alert.

Customers dealing with troubled automotive suppliers often decide to resource production to other suppliers rather than facilitate a true restructuring of the troubled supplier's business. Such resourcing, however, generally cannot be done overnight. Tier 1 suppliers or original equipment manufacturers ("OEMs") often take months to resource production. Because of the "just in time" production process, Tier 1 suppliers and OEMs often cannot afford to be without component parts or tooling for the period of time that it may take to resource.