An often asked question is the difference in the insolvency process between Scotland and England. Although the aim of each system is similar, the legislation between the two jurisdictions is different and this means that the processes are also different.
There are similarities in the rules and procedures as they are governed by The Insolvency Act 1986, but some aspects are markedly different in Scotland when compared to the rest of the UK including England. In this article, we will go through some of the significant differences between the jurisdictions.
The basicsInsolvency systems in England and Scotland aim to provide a legal solution to companies with no capacity to pay back their debts.
Liquidator of last resortOne of the major differences between the insolvency processes in England and Scotland is that there is no Official Receiver in Scotland. This effectively means there is no ‘liquidator of last resort’.
Law of Property Act ReceiverScotland also does not have a Law of Property Act (LPA) Receiver. The only type of receivership in Scotland is Administrative Receivership as set out in Chapter 2 of Part 3 of the Insolvency Act 1986.
Onerous property and contractsIn Scotland, there is no statutory power to disclaim onerous property or contracts in an insolvency as in sections 178 or 179 of the Insolvency Act 1986. However, there are common law rules in relation to how insolvency practitioners should deal with onerous property and contracts.
Creditor feesThere are different procedures for approving fees between the two jurisdictions. In Scotland, there is no ability to agree fees in advance with creditors, rather there is a retrospective approval of accounts. The fees are then approved by the creditors or the court.
Insolvency Rules 2016The Insolvency Rules 2016 came into force in April 2017 for England and apply to all insolvency proceedings irrespective of when those proceedings started. The rules however do not impact on Scotland where the governing document is the Insolvency (Scotland) Rules 1986.
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