The Bankruptcy (Scotland) Act 2016 came into force yesterday, 30 November 2016, together with other consequential amendments and changes to the Court Rules which relate to bankruptcy in Scotland.
When considering whether or not to bring a legal action, it is important to establish if it is competent and commercially worthwhile to do so. The ability to bring, or continue with, legal proceedings against a company can be restricted if that company enters into a formal insolvency process. The position of creditors may be improved now that the Third Party (Rights Against Insurers) Act 2010 has at last been brought into force.
Bankruptcy made clearer: One of the bastions of old-style Scots terminology, guaranteed to perplex Southern audiences, is the law of bankruptcy in Scotland as it applies to individuals and assorted others.
But maybe for no longer. The Bankruptcy (Scotland) Act 2016 has reached the statute book. It’s a consolidating act, encompassing statutes from 1985, 1993, 2002, 2007, 2012 and 2014. It introduces a new and fairly modern framework, the aim being to make it less cumbersome and easier to use by those who do not have intimate knowledge of it (most of us!).
In 2009, General Motors (“Old GM”) commenced a chapter 11 case and sold the bulk of its business and assets to a new entity (“New GM”) “free and clear” of liabilities against New GM. Notwithstanding the “free and clear” language of the 2009 sale order (the “Sale Order”), a Second Circuit panel recently held that plaintiffs could assert claims against New GM over faulty ignition switches in cars manufactured by Old GM and recalled in early 2014.
The Bankruptcy (Scotland) Act 2016 (the “Act”) received Royal Assent on 28 April 2016 and is expected to come into force by the end of the year.
The Act is only the second piece of primary consolidation legislation to have passed through the Scottish Parliament and brings together the various laws on personal insolvency into a single piece of legislation.
At the moment, the law is rather unwieldy and difficult to follow in practice.
This article was initially published in The Bond Buyer and is part of a larger piece that will be published in April in the Journal of Bankruptcy.
A recent court ruling is a good reminder to health care providers that bankruptcy may not (as is sometimes suggested) be a safe harbor for providers in danger of being forced out of business by the loss of their Medicare and Medicaid provider agreements.
Following the lead of the Illinois Supreme Court in In re Pension Reform Litigation, 2015 IL 118585 [see Illinois and New Jersey Pension Decisions: Implications for Bondholders], Judge Rita Novak of the Circuit Court of Cook County has ruled that an Illinois law modifying provisions of Chicago’s pension statute violated the Illinois Constitution.