Bermuda—introduction to insolvency and restructuring law and practice: part two Winding-up rules in Bermuda The rules and precedent forms relating to compulsory winding up of companies are principally contained in: • the Companies (Winding-Up) Rules 1982, which were modelled on the UK’s Companies (Winding-Up) Rules 1949, with some amendments • the Rules of the Supreme Court of Bermuda 1985, and • various practice directions issued by the Supreme Court of Bermuda These rules and practice directions have been the subject of consideration in a number of cases decided by the Supreme Court. The general purpose of the liquidation process The general purpose of the liquidation process is to gather in and realise assets, to pay off creditors in accordance with their rights and priorities, and then to distribute any remaining assets to the company’s shareholders, after payment of the costs and expenses of the liquidation. However, there are circumstances in which the liquidation process can be used to effect a restructuring of a business. Liquidators are generally given a degree of discretion as to the time period within which to effect and complete the liquidation, which may depend to some extent on the nature, location and liquidity of the company’s assets. However, the conduct of a liquidation by liquidators can be challenged by interested parties and reviewed by the court in appropriate circumstances. After the liquidation process is complete (and assuming that there has not
Scotland: liquidation'>compulsory liquidation For the impact of Brexit on Scottish procedures, see Practice Note: Table showing impact of Brexit on jurisdiction to commence insolvency/restructuring proceedings and obtain recognition in other EU Member States. The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018, SI 2018/1082 and Insolvency (Scotland) (Receivership and Winding up) Rules 2018, SSI 2018/347 (the ‘IRSWUP Rules 2018’), came into force on 6 April 2019. The content of this Practice Note reflects the application of the IRSWUP 2018 Rules. This note does not address any transitional provisions as may be applicable, on the assumption that there will be few cases remaining for which the transitional provisions would be relevant. For further information on the changes, see: • Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018, LNB News 15/10/2018 111 • Insolvency (Scotland) (Receivership and Winding up) Rules 2018, LNB News 15/11/2018 7 • New insolvency rules for Scotland—what the changes will mean • New changes under the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 This Practice Note looks at compulsory liquidation in Scotland and sets out: (i) the entities that may petition for the winding-up of a company; (ii) the circumstances in which such a petition may be presented; and (iii) the process to be undertaken in seeking to obtain a winding-up order from the court. For
Glossary of Scottish insolvency words and expressions This is a glossary of common words and expressions used in Scottish insolvency law with the nearest England and Wales insolvency law equivalent (where relevant). Absolute insolvency Meaning Nearest English Equivalent Where an individual debtor's debts exceed the total value of assets balance sheet insolvency Accountant in Bankruptcy (AiB) Meaning Nearest English Equivalent This is an Agency of the Scottish Government, which supervises the process of personal bankruptcy (sequestration) in Scotland and can act as trustee in sequestrations where no insolvency practitioner is nominated to act. It also records corporate insolvencies (receivership and liquidations only) in Scotland, but does not act as an Official Receiver (see Practice Note: Scotland: the Accountant in Bankruptcy) N/A Acquirenda Meaning Nearest English Equivalent Any property or right acquired or received by a debtor for a period of four years after the date of sequestration. Prior to 1 April 2015, the period for acquirenda finished when the debtor was discharged from sequestration N/A Act and warrant Meaning Nearest English Equivalent A document issued by the court in sequestrations commenced prior to 1 April 2008 formally vesting a debtor’s estate in a trustee. Since that date, the Award of Sequestration vests debtor's estate in the trustee N/A Act of division and sale
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