The Insolvency (Scotland) Amendment Rules 2006

Explanatory Note

(This note is not part of the Rules)

These Rules make changes to the Insolvency (Scotland) Rules 1986 (S.I. 1986/1915).

Rule 2.39 of the Insolvency (Scotland) Rules is replaced to clarify that in circumstances where an administrator had made a statement under paragraph 52(1)(b) of Schedule B1 to the Insolvency Act 1986, if it falls to the creditors to fix or increase the administrator’s renumeration, those creditors comprise the secured creditors (with the inclusion of more than 50 per cent of the preferential creditors where a distribution is made etc. to preferential creditors); to state expressly that the expenses of the administration per Rule 4.67(1), as applied by Rule 2.41, are expenses of the former administration for the purposes of paragraph 99(3) of Schedule B1 to the Insolvency Act 1986; to provide for remuneration to be set by the creditors rather than the court in certain cases; and for the removal of the obligation to have legal expenses subject to taxation.

As a result of the changes made to the law on administration by the Enterprise Act 2002 (c. 40) a company can move between liquidation and administration. This procedure enables creditors to make their claim as at the date of the liquidation. By way of clarification of the existing rules, the amendments provide that the relevant date is the date of the commencement of the winding up. Rules 11 and 12 make minor consequential clarification of Rules 2.57 and 2.58.

Rule 13 provides that in public interest winding-up petitions the provisional liquidator may only be removed by the court on the application of either the provisional liquidator or the Secretary of State.

Rule 7.34 is amended to make provision for when the Secretary of State can require information from an administrator and the circumstances in which an administrator can dispose of a company’s records.

Rule 15 inserts a new Rule 7.35 into the Insolvency (Scotland) Rules 1986. This provides that an insolvency practitioner can be required to provide a statement of the number of hours spent on a case (other than a liquidation or receivership) by the insolvency practitioner and his staff by grade and further makes provision for the circumstances in which a statement should be made and the information to be included in that statement.

Minor amendments are made to the following Forms–

• 2.4B(Scot), 2.5B(Scot), 2.6B(Scot), 2.8B(Scot) and 2.9B(Scot) – Amendment to side-note in relation to EC Regulation proceedings to include reference to secondary proceedings.

• 2.7B(Scot) –

  (i)

  to clarify that notice is to be sent to the persons listed in Rule 2.13(2);

  (ii)

  amendment to side-note in relation to EC Regulation proceedings to include reference to secondary proceedings.

• 2.10B(Scot) – Revised to remove reference to the company’s trade classification number.

• 2.12B(Scot) –

  (i)

  Revised wording to reflect requirement of paragraph 48(1) of Schedule B1 that statement of affairs must be submitted within 11 days of receipt of the notice: reference to a final date for submission is deleted;

  (ii)

  revised wording of the Note at the foot of the form to reflect the requirements of Rules 2.24(1) – administrator having to form a view as to the reasonableness of the expenses incurred in preparing the statement of affairs prior to payment – and Rule 2.20(4) – no requirement for instructions to be sent with the forms for the statement of affairs.

• 2.13B(Scot) – page 2 is substituted with a revised statement of affairs to reflect how the prescribed part should be applied to unsecured creditors and floating charge holders and page 13 is substituted to correct a typographical error.