The long-awaited Scottish Rules are here!
Due to the nature of the partially devolved corporate insolvency regime, Scotland’s Rules are found in two pieces of secondary legislation. The Insolvency (Scotland) (Company Voluntary Arrangement and Administration) Rules 2018 and the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 (“the new Scottish Rules”) were laid last month and will bring Scotland’s corporate insolvency regime broadly in line with England and Wales from 6 April 2019. Are you ready?
Perhaps the most significant change is the restriction placed upon an office holder’s ability to hold a physical meeting of creditors. Decisions of creditors are to be obtained using either deemed consent (where this is available) or by one of a number of prescribed decision procedures: correspondence, virtual meeting or electronic voting, with physical meetings available only where requested by the requisite number or value of creditors (the 10/10/10 rule).
Practitioners South of the Border have got to grips with these new requirements over the last two years, but not without some teething pains. Concerns remain about verifying the identity of a participant in a virtual meeting, and the potential implications of a person being excluded because of a technological failure. Perhaps counter-intuitively, it seems removing the requirement of a physical meeting has not increased creditor engagement. But the good news for practitioners dealing with Scottish appointments from 6 April 2019 onwards, is that a lot of creditors and stakeholders will be familiar with the decision-making process already.
As those of you dealing with Scottish cases know, the process for obtaining approval for remuneration is distinct from England & Wales and invariably involves the court. The remuneration approval process will remain largely unaltered, which limits the impact of the decision-making procedures when compared to England & Wales.
A more welcome revision may be the changes to the operation of accounting periods that allow an IP to manage accounting periods without court or committee approval. The first two six-month accounting periods will remain, but thereafter a practitioner can defer a claim for remuneration without court or committee approval.
We will be examining the new legal requirements and their practical implications at a series of courses running throughout January and February 2019 and providing document packs and compliance support.
For further information about how ISS may assist you in adjusting to these changes, contact: [email protected]