Legislation

The legislation governing corporate insolvency in Scotland is:

  • The Insolvency Act 1986 (the 1986 Act)
  • The Insolvency (Scotland) (Receivership and Winding up) Rules 2018
  • The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018
  • The Insolvency (Scotland) Rules 1986, SI 1986/1915

The Insolvency (Scotland) (Receivership and Winding up) Rules 2018 & The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018

These rules came into force on 6 April 2019 and subject to transitional and savings provisions apply to the administration of Corporate Insolvency cases subject to receivership or winding up.

Amendments to the Insolvency Act 1986

Significant amendments to The Insolvency Act 1986 were then made by the Company Director Disqualification Act 1986, the Human Rights Act 1998, the Scotland Act 1998, the Insolvency Act 2000, the Enterprise Act 2002, the Small Business Enterprise and Employment Act 2015, The Public Services Reform (Insolvency) (Scotland) Order 2016 and the Public Services Reform (Corporate Insolvency and Bankrutpcy) (Scotland) Order 2017. 

The Scotland Act 1998

The Scotland Act 1998 provides [1] that all main aspects of insolvency law in relation to companies and corporations are reserved within the UK legislative framework. Only receivership and the actual procedure for winding up of a company are devolved matters.

The Human Rights Act 1998

The introduction of the Human Rights Act 1998 means that a public authority, including any person whose function is of a public nature, may not act in contravention of the European Convention of Human Rights. It is thought that liquidators and administrators [2], who are officers of court, will be regarded as public authorities. Also voluntary liquidators (who are not deemed officers of court) may be regarded as such.

The Enterprise Act 2002

The Enterprise Act 2002 reformed corporate insolvency by streamlining the company administration process, making it easier to access and more flexible, restricting the use of administrative receivership and abolishing the Crown's preferential rights.

[1] Schedule 5, Head C: Trade and Industry, paragraph C2 Insolvency, effected by section 29 of the Act

[2] Appointed after the 2002 Act came into force

The Small Business, Enterprise & Employment Act 2015

This was introduced to make the process of corporate insolvency more efficient and to reduce the costs of administering insolvency proceedings leading to higher returns for creditors. One of the most significant changes has been the removal of physical meetings of creditors as the default decision making process.

The Public Services Reform (Insolvency) (Scotland) Order 2016 & the Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017

These were introduced to modernise and align where appropriate, the corporate insolvency regime in Scotland and the functions of Insolvency Practitioners operating in Scottish Insolvencies with those undertaking equivelant work in England and Wales.