(Originally published on September 29, 2011)

The Act of May 20 2011 implements EU Directive 2009/44/EC (amending the EU Settlement Finality Directive and the EU Collateral Directive), and amends the Collateral Act of August 5 2005. The Collateral Act has always been a lender-friendly implementation of the Collateral Directive. Most of its provisions have not changed and in general, the Collateral Act remains favourable to creditors in insolvency situations and other contexts.

Constitution and perfection of collateral arrangements

Tax treatment in the hands of the creditor

Tax treatment in the hands of the creditor

The waiver of an outstanding debt by a creditor shall be treated as an extraordinary loss for accounting purposes. As taxable income for corporate income tax purposes is calculated from the company’s accounting results assessed upon accounting regulations, such loss is normally deductible unless income tax law provides for an adjustment.

Tax treatment in the hands of the creditor

In Sweden, debt is typically waived through either judicial settlement (Sw. offentligt ackord) (which will not be discussed here) or through private settlement (Sw. underhandsackord) between creditor and debtor.

The Court of Session found that an insurer had not waived disclosure under the Insurance Act 2015 (“the Act”). The case is the first to be decided under the Act.

Background

A fire occurred at Mr Young’s property (“the Property”) causing extensive damage. Mr Young then claimed an indemnity from his insurers, Royal and Sun Alliance PLC (“RSA”).   

Application for an administration order in respect of FM Front Door Ltd. The application followed FM’s failure to make payments under a loan from the Dunfermline Building Society obtained to assist with the purchase of flats at the Skyline development on Finniestoun Street in Glasgow.  The loan was secured by a floating charge and standard securities over each of the flats. FM’s parent company FM Developments also granted a guarantee for the loan.

Clause 13 of the loan agreement provided that the grounds for default included:

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

The UK generally distinguishes between “loan relationship” debts (e.g. loan receivables) and other debts (e.g. trading debt in respect of outstanding consideration for the sale of goods or services). It is possible to turn a trading debt into a loan relationship by issue of a debenture in respect of it.

Tax treatment in the hands of the creditor

Although this case is about a trustee in bankruptcy’s fight to realise his interest in a property by virtue of a debtor’s bankruptcy, the facts (though extreme) are not untypical of a finance company’s position when a hirer refuses to return goods to it despite the fact the court has ordered the hirer to do so.

In this case Mr Canty was made bankrupt in relation to a relatively small debt and he never accepted the position. There followed a number of appeals and challenges over the following years in which he attempted to reopen and relitigate earlier proceedings.

Defendants in a lawsuit didn’t waive their right to arbitrate even after moving to dismiss and answering a complaint, a court held last week. Arbitration wasn’t waived because the defendants hadn’t filed affirmative defenses or counterclaims and had taken no discovery. Trevino v. Select Portfolio Servicing, Inc. (In re Jose Sr. Trevino), Adv. Pro. No. 16-7024, 2018 Bankr. LEXIS 3605 (Bankr. S.D. Tex. Nov. 14, 2018).