Once a debtor enters bankruptcy, the statutory insolvency regime is engaged such that creditors are able to prove for their debts in the sequestration instead of having to raise proceedings. Provided a debt is not extinguished by prescription at the date of the sequestration, the creditor will be able to prove in the bankruptcy for their debt. Schedule 2 to the Bankruptcy (Scotland) Act 2016 (Ba(S)A 2016) provides for the claims that can be made by creditors generally. Ba(S)A 2016, Sch 2,

The Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (LW(CD)(S)A 2015) provides for the execution of documents in counterpart in Scotland. As noted by the Registers of Scotland (RoS) Guidance on documents executed in counterpart (Guidance), execution in counterpart is the process whereby the parties to a document each sign a separate physical copy rather than all the parties

Where a qualifying floating charge-holder (QFCH) has made an appointment of an administrator out of court and there is an outstanding winding-up petition, the petition is suspended. The suspension of the petition carries with it the suspension of the operation of section 127 of the Insolvency Act 1986 (IA 1986) which avoids dispositions of property of the company in the period between the winding-up petition being presented and the winding-up order being made (see IA 1986, s 127(2)). Therefore, any disposition of the company’s property during the period of suspension by an administrator who has been appointed out of court by a QFCH will not be avoided under IA 1986, s 127 (see Re J Smith Haulage Ltd [2007] BCC 135 (not reported in LexisNexis®). However, before the administrator’s appointment, IA 1986, s 127 will have effect

The Insolvency Act 1986 (IA 1986) provides for the out-of-court appointment of an administrator by a company or its directors—see particularly, IA 1986, Sch B1, para 22, and IA 1986, Sch B1, paras 26–31, as well as the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 (ISCVAAR 2018), SI 2018/1082, rr 3.23 and 3.24. The company or its directors who propose to make the appointment of an administrator of the company (as they are empowered to do by IA 1986, Sch B1, para 22) are required by IA 1986, Sch B1, para 26(1) to give at least five business days’ written notice to any qualifying floating charge holder

In Scotland, a Part 26A restructuring plan (RP) as found in Schedule 9 Part 1 of the Corporate Insolvency and Governance Act 2020 (CIGA 2020) can proceed even if there is an extant winding up petition. However, the process of winding–up in Scotland differs to that in England. In Scotland, the process of winding–up is governed by the Insolvency Act 1986. Once the court has deemed that

When a company is put into administration, the management and running of the company is taken over by the administrator. The directors no longer run the company and no one has the legal capacity to make any decisions concerning the company apart from the administrator and the court. Creditors (which includes shareholders) are restricted in the actions they

An administrator acts as agent of the company and is granted statutory powers to execute documents in the name of the company under paragraphs 8–9 of Schedule 1 to the Insolvency Act 1986 (IA 1986). Administrators have power to: • use the company’s seal • execute in the name of and on behalf of the company any deed, receipt or other document It is standard practice for an administrator to execute sale contracts for both the company in administration and in their personal

Section 1140 of the Companies Act 2006 (CA 2006) provides for serving documents on directors, secretaries or other specific individuals contained within CA 2006, s 1140(2)(c). This was created as an alternative service method to the ones provided under the Scottish court rules (see Chapter 16 of the Rules of the Court of Session 1994 and Chapter 5 of the Ordinary Cause Rules 1993). Under CA 2006, s 1140, a document is deemed to be served on a person to which this section applies by leaving it at, or sending it by post, to the person’s registered address. A registered address is defined at CA 2006, s 1140(4) as the address

The Corporate Insolvency and Governance Act 2020 (CIGA 2020), in force from 26 June 2020, abolishes the moratorium procedure for small companies under Schedule A1 to the Insolvency Act 1986 (IA 1986) to make way for the standalone moratorium procedure. For further details, see Practice Note: Corporate Insolvency and Governance Act 2020—moratorium and News Analysis: Corporate Insolvency and Governance Act 2020—company moratorium (Scotland). The Insolvency (Scotland) (Company Voluntary Arrangement and Administration) Rules 2018 (ISCVAAR 2018), SI 2018/1082 were laid before the UK Parliament on 15 October 2018 and are in force from 6 April 2019. The Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 (ISRWR 2018), SSI 2018/347 were laid before the Scottish Parliament on 14 November 2018 and are in force from 6 April 2019. The reason for two sets of rules reflects the devolved settlement and respective responsibilities of the Scottish and UK parliaments for corporate insolvency processes. Accordingly, certain parts of each set of rules are mirrored and reference to both sets of rules is given where parts and rules

Loan market and developments Overview Generally speaking, the loan market in Scotland has much in common with the loan market in England. Financial services regulation applies on a UK-wide basis; much of the legislation applicable to companies and other corporate vehicles (including corporate insolvency) applies across the UK; and all of the Scottish clearing banks operate across all jurisdictions within the UK (and vice versa). In practical terms this means that English law governed loan documents do not need to be substantially revised in cross-border UK lending transactions. There are certain differences in terminology and some statutory differences which must be accounted for but, beyond those areas, an English law loan document and a Scots law loan document are very similar. It is common, for example, for English law loan agreements to be used in Scottish lending transactions. The key differences between jurisdictions lie in property law and the law of rights in security, where Scots law and English law are very different. Lending Is it necessary to obtain any consents or licenses in

It is assumed that this involves a creditor who has successfully petitioned for the winding up of a company registered in Scotland. The Insolvency (Scotland) (Receivership and Winding up) Rules 2018 (ISRWR 2018), SSI 2018/347 do not require the petitioning creditor to serve a winding-up order, whether by the methods

Generally, the amount in respect of which a creditor is entitled to claim is the accumulated sum of principal and interest which is due on the debt as at the date of sequestration. A secured creditor, in calculating the amount of its claim, is required to deduct either: (i) the value of any security as estimated by the secured creditor, or (ii) where the security has been realised, the amount (less the expenses of realisation) which it has received or is entitled to receive from the realisation. In either case, the balance is