(This note is not part of the Regulations)
These Regulations amend section 51 of the Insolvency Act 1986 (“the 1986 Act”) to deal with an unintended consequence arising out of the EU Council Regulation on Insolvency Proceedings (Regulation (EC) No. 1346/2000) (“the EU Regulation”).
Article 3 of the EU Regulation provides that the courts of the member state in which a company has its centre of main interests have jurisdiction to open insolvency proceedings in relation to that company. The courts of another member state have such jurisdiction only where the company also has an establishment in that member state. The EU Regulation therefore also had the unintended effect of limiting the power in section 51 of the 1986 Act to appoint a receiver to enforce a floating charge over property situated in Scotland where a borrowing company has its centre of main interest in a member state other than the UK and no establishment in the UK. This is because section 51 requires that the Court of Session has jurisdiction to wind up the company.
The regulations remove this limitation by making provision in section 51 for the power to appoint a receiver over the property in Scotland of a company in respect of which the courts of another member state have jurisdiction to open insolvency proceedings.