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Legal Analysis: Solvent schemes survive
17 March 2010
A ruling in Scotland has put schemes of arrangement under scrutiny.
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Scottish Lion Insurance Company
SL
solvenct schemes
Companies Act
Over recent months, there has been a battle taking place in the Scottish Courts regarding the extent to which a scheme of arrangement pursuant to Part 26 of the Companies Act 2006 can be used to bring an end to a company’s liabilities where the company is solvent. On appeal, the Inner House of the Court of Session in Scotland finally released its decision on the issue on January 29 2010.
Background
Scottish Lion Insurance Company (SL) wrote a mixture of insurance and reinsurance business in the London market with a significant part of this business being ‘occurrence-based’.
SL stopped writing new business in December 1994 and went into run-off.
Although SL was solvent, SL wished to enter into a scheme with its creditors in order to bring finality and certainty to SL’s liabilities. Section 899 of the Companies Act 2006 makes it expressly clear that a majority in...
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