New Corporate Insolvency Rules for Scotland
In the Autumn of 2018, two new sets of corporate insolvency rules were released in Scotland, both of which will come into effect on 6 April 2019 and will mark the most significant changes to insolvency working practices in Scotland in over 30 years. These much anticipated rules are The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 and The Insolvency (Scotland) (Receivership and Winding up) Rules 2018 and the intention is to consolidate, modernise and harmonise procedures in Scottish corporate insolvency. Following on from the Insolvency (England and Wales) Rules 2016 introduced on 6 April 2017, Scotland has two sets of rules because it has a partially devolved corporate insolvency regime, however, many of the new provisions are similar if not the same as those contained within the England and Wales Rules, but please beware as there are also some differences too.
With just one month to go until these rules are implemented - how ready is the Scottish insolvency profession? We are obviously living in uncertain times, in particular, Brexit uncertainty, with ‘B’ Day set to happen on 29 March 2019, just a few days before implementation of these new rules. This could result in chaos if the profession is not prepared especially given that more insolvencies and financial casualties are anticipated due to the insecurity of Brexit.
Being fully prepared for the practical effect that these new rules will have on corporate insolvency procedures in Scotland is therefore essential, so it is recommended that the rules are read and digested now and practical processes implemented in readiness. The rules will apply to all new and existing appointments from 6 April 2019 onwards except for some minor transitional and savings provisions laid down in Schedule 2 of each set of rules.
In total, both sets of Rules comprise over 300 pages of legislation and the structure and layout of the rules is different to the current format. Whilst the new rules aim to be consistent in style and format, as there are common parts and specific parts, it will often be the case that more than one rule will be required to be referred to when navigating in respect of a particular insolvency process. The rules also move away from the use of prescribed forms for certain gazette notices, Registrar of Companies and the Accountant in Bankruptcy to a requirement to prepare notices with standard contents as laid down in the rules.
To help the profession, the Accountant in Bankruptcy has, very helpfully, prepared a Tables of Derivations and Destinations to assist with comparing the new legislation to the existing legislation, this is available at: https://www.aib.gov.uk/sites/default/files/2018_ci_rules_-_collated_derivation_and_destination_tables.pdf
In addition, there will be new Statements of Insolvency Practices issued in due course and some will be repealed.
If you have any queries regarding the new rules, please click here to get in touch with our team.
Insolvency Rules Breakfast Briefing
We are hosting a breakfast briefing at our Glasgow office on Wednesday 13th March which will focus on the new rules, please click here to find out more and to book your space.