One month until introduction of significant changes to Scotland’s insolvency working practices

Judith Howson

The new rules are the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 and The Insolvency (Scotland) (Receivership and Winding up) Rules 2018.

The new regulations are being introduced with the intention being to consolidate, modernise and harmonise procedures in Scottish corporate insolvency.

This follows similar changes to Insolvency rules in England and Wales introduced in 2017 but Scotland has two sets of rules because it has a partially devolved corporate insolvency regime, so the changes are similar to those south of the border but with differences.  

Judith Howson, restructuring and debt advisory manager with French Duncan, said: “These new rules aim to unify some anomalies between the Scottish and rest of UK systems at the same time reflecting the devolved nature of the corporate insolvency system. Some of these changes are practical and sensible such as the removal of meetings as the default decision mechanism and the ability for creditors to opt-out of receiving correspondence.”

 “There is also provision to allow debts of £1,000 or less to be treated differently for dividend purposes; the new rules enable greater use of websites by office holders; greater use of electronic communication; fixed term progress reporting; and enabling office holders to report to creditors that remuneration will not be claimed in an accounting period rather than making an application to defer the accounting period.”

Ms Howson continued: “Other changes include the alignment of accounting periods and reporting in winding up procedures and increased privacy for private individuals who are creditors in insolvency proceedings.”

“While much of this is quite technical it is also practical reflecting the changing way in which corporate insolvency is delivered to allow for a more inclusive, quicker, and less arcane system which more adequately mirrors current business methods of working.”

Ms Howson concluded: “Everyone working in the insolvency sector needs to be aware of these long- awaited changes to the Scottish Corporate Insolvency Rules.  Due to a quirk in the way the responsibilities for corporate insolvency have been devolved we have two sets of rules, rather than one set as in England & Wales. Nevertheless, these changes should make the process simpler, more modern and unified, and in the face of the uncertainties presented with Brexit, will contribute to making sure that Scotland has a strong insolvency framework, and continues to be a good place to do business.”

French Duncan said it is to hold a breakfast briefing on the new corporate insolvency rules for Scotland at 8.00am - 10.00am on 13th March 2019 at the firms’ Glasgow office at 133 Finnieston Street, Glasgow.

Further details are available from j.turner@frenchduncan.co.uk or by phoning 0141 271 3989.