HM Insights

The Insolvency (Scotland) Amendment Rules 2014

The Insolvency (Scotland) Amendment Rules 2014 (the "2014 Rules") came into force on 30 May 2014 and are applicable to cases where a receiver is appointed, a resolution for the winding up of a company is passed, a petition for liquidation is lodged or an application for the appointment of a provisional liquidator is made on or after 30 May 2014.

One of the aims of the 2014 Rules is to remove the application of the Bankruptcy (Scotland) Act 1985 from the Insolvency (Scotland) Rules 1986.  In doing so, the need to translate terminology applicable to sequestrations into terminology suitable for corporate insolvency scenarios is removed allowing the Rules to stand alone without the need for cross referencing provisions and sections of another Act.

In addition to such consolidating amendments, the restated Rule 4.32 allows a liquidator to apply to the liquidation committee for an interim claim for outlays reasonably incurred by the liquidator and for the liquidator's remuneration.  The basis of the liquidator's remuneration may now be fixed as a percentage of the value of the company's assets realised by the liquidator as well as by reference to the work reasonably undertaken by the liquidator or as a set amount. The liquidator or any creditor will now have 14 days after the issue of the determination of the liquidator's outlays and remuneration rather than 8 weeks from the accounting period end to appeal any such determination.

The initial meeting of a liquidation committee must now be held within 6 weeks of the establishment of the committee rather than 3 months.  There are also minor amendments to the rule relating to the automatic termination of membership of a liquidation committee member and the composition of a liquidation committee where creditors are paid in full.

In limited circumstances, notices and other documents relating to receiverships and liquidations may be sent by electronic means.  The recipient must consent to delivery by email and the notice or document will be presumed to have been delivered where the sender can produce a copy of the email with the notice or other document attached and which shows the date and time of sending and the address to which the email was sent.

It is worthwhile noting that, among other things, electronic delivery will not be valid when lodging documents at court, serving any order of court, submitting documents to Companies House or serving a statutory demand.

The standard content of Edinburgh Gazette notices required by Rule 7.21A for CVA and administrations is extended to receiverships and liquidations.  For notices advertised other than in the Edinburgh Gazette, the information required by Rule 7.21B for CVA and administrations is extended to receiverships and liquidations.

In addition, the 2014 Rules introduce new provisions relating to the block transfer of liquidation appointments by a single application to the Court of Session where a liquidator has died, retired from practice or is otherwise unable or unwilling to continue in office. The courts will take into account (i) the reason for making the application, (ii) the number of cases to which the application relates, (iii) the value of the assets comprised in the cases, and (iv) the nature and extent of the costs involved in considering the application.

Further provisions have been included allowing applications to the court to limit disclosure of all or part of the statement of affairs in receivership or liquidations where it would be prejudicial to the conduct of the receivership/liquidation to make such a disclosure or where disclosure might reasonably by expected to lead to violence against any person.

The 2014 Rules also introduce an amended Form 4.9(Scot) – notice of appointment of liquidator and Form 4.24 (Scot) – Notice of certificate that creditors paid in full.