Act of Sederunt (Sheriff Court Company Insolvency Rules 1986) Amendment 2003

Explanatory Note

(This note is not part of the Act of Sederunt)

This Act of Sederunt amends the Act of Sederunt (Sheriff Court Company Insolvency Rules) 1986 (“the original rules”).

The procedure required to give effect in the sheriff court to the provisions of the Insolvency Act 1986 (“the Act of 1986”) is provided in part by the original rules, and in part by the Insolvency (Scotland) Rules 1986 (“the Insolvency Rules”).

The Enterprise Act 2002 (“the 2002 Act”) amended the Act of 1986 to provide that for most companies–

(1) an administrator can be directly appointed to a company by the holder of a qualifying floating charge, a company, or the directors of a company, subject to notice being given to the court, and the court’s powers to make an administration order; and

(2) where there is a floating charge, a prescribed part of the assets of a company shall be set aside for unsecured creditors, unless any liquidator, administrator or receiver can satisfy the court that the prescribed part should not apply, by making an application under section 176A of the Act of 1986.

The Insolvency (Scotland) Amendment Rules 2003 have amended court procedures, so far as specified by the Insolvency Rules. This Act of Sederunt makes the remaining procedural provision required for the sheriff court, by amending the original rules.

Insolvency procedures have also been affected by Council Regulation (EC) 1346/2000 (“the EC Regulation”), which makes rules for insolvency proceedings in different member states that relate to the same undertaking.

Article 2 amends Part II of the original rules (administration orders), by providing–

(a) where appropriate, that any petition has averments on the further grounds for making an administration order introduced by the 2002 Act;

(b) that any petition shall include averments relating to the EC Regulation;

(c) a new rule 12 on appeals and applications, replacing the detailed list of such appeals and applications in the rule 12 of the original rules;

(d) a new rule 14, which makes a similar provision for hearings on administrator’s proposals in those cases affected by the 2002 Act, as the rule 13 of the original rules makes for the original provisions of the 1986 Act where they still apply;

(e) a new rule 14A, which provides where appropriate for the determination of the day and time of lodging of any notice or document; and

(f) minor and consequential amendments to that Part.

Article 3 amends Part V of the original rules (general provisions), by providing that an application under section 176A of the Act of 1986 shall be by petition or note as appropriate, and that notice of a hearing on that application shall be given only to the petitioner or noter unless the sheriff directs otherwise.

Article 4 gives effect to the Schedule , which makes consequential amendments to the original rules.