The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018

Made: 11th October 2018

Laid before Parliament: 15th October 2018

Coming into force: 6th April 2019

The Secretary of State makes the following Rules in exercise of the power conferred by section 411(1)(b), (2) and (2A) of the Insolvency Act 1986 .

The Scottish Ministers have consented to these Rules in accordance with Article 5(2) of the Scotland Act 1998 (Insolvency Functions) Order 2018 .

INTRODUCTORY RULES

Citation and Commencement

1

These Rules may be cited as the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 and come into force on 6th April 2019.

Revocations

2

The enactments listed in the first column of the table in Schedule 1 are revoked to the extent specified in the third column of that table.

Extent and application

3

• (1) These Rules extend to Scotland only.

• (2) These Rules, as they relate to company voluntary arrangements under Part 1 of the Act and administration under Part 2 of the Act, apply in relation to companies which the courts in Scotland have jurisdiction to wind up.

Transitional and savings provisions

4

The transitional and savings provisions set out in Schedule 2 have effect.

Punishment of offences

5

Schedule 3 sets out the maximum penalties for offences under these Rules.

Review

6

• (1) The Secretary of State must from time to time—

• (a) carry out a review of the regulatory provision contained in these Rules; and

• (b) publish a report setting out the conclusions of the review.

• (2) The first report must be published before the end of the period of five years beginning with the day on which these Rules come into force.

• (3) Subsequent reports must be published at intervals not exceeding five years.

• (4) Section 30(4) of the Small Business, Enterprise and Employment Act 2015[^f00003] requires that a report published under this rule must, in particular—

• (a) set out the objectives intended to be achieved by the regulatory provision referred to in paragraph (1)(a);

• (b) assess the extent to which those objectives are achieved;

• (c) assess whether those objectives remain appropriate; and

• (d) if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision.

• (5) In this rule, “regulatory provision” has the same meaning as in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015 (see section 32 of that Act).

PART 1 — SCOPE, INTERPRETATION, TIME AND RULES ABOUT DOCUMENTS

CHAPTER 1 — Scope of these Rules

Scope

1.1

• (1) These Rules are made to give effect, in Scotland, in relation to company voluntary arrangements and administration, to—

• (a) Parts 1 and 2 of the Insolvency Act 1986; and

• (b) the EU Regulation.

• (2) Consequently, references to insolvency proceedings and requirements relating to such proceedings are, unless the context requires otherwise, limited to insolvency proceedings in respect of Parts 1 and 2 of the Act and the EU Regulation (whether or not court proceedings).

CHAPTER 2 — Interpretation

[Note: the terms which are defined in rule 1.2 include some terms defined in the Act for limited purposes which are applied generally by these Rules. Such terms have the meaning given by the Act for those limited purposes.]

Defined terms

1.2

• (1) In these Rules, unless the context otherwise requires—

• “the Act” means the Insolvency Act 1986, and— a reference to a numbered section without mention of another Act is to that section of the Act; and a reference to Schedule A1[^f00004] or B1[^f00005] is to that Schedule to the Act;

• “the Companies Act” means the Companies Act 2006[^f00006];

• “appointed person” means a person who meets the requirements in paragraph (2) and who is appointed by an office-holder;

• “Article 1.2 undertaking” means one of the following within the meaning of Article 1.2 of the EU Regulation— an insurance undertaking; a credit institution; an investment undertaking which provides services involving the holding of funds or securities for third parties; a collective investment undertaking;

• [Note: “associate” is defined in section 435];

• “attendance” and “attend”— a person attends a meeting by being present, by attending remotely in accordance with section 246A[^f00007] or rule 5.6, or by participating in a virtual meeting; and a person may attend a meeting in person, by proxy or by corporate representative (in accordance with section 434B[^f00008] of the Act or section 323 of the Companies Act, as applicable);

• “authenticate” means to authenticate in accordance with rule 1.6;

• “blank proxy” is to be interpreted in accordance with rule 6.3

• [Note: “business day” is defined in section 251]

• “centre of main interests” has the same meaning as in the EU Regulation;

• [Note: “connected” used of a person in relation to a company is defined in section 249 of the Act];

• “consumer” means an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession;

• “convener” means an office-holder or other person who seeks a decision in accordance with Part 5 of these Rules;

• [Note: “the court” is defined in section 251];

• “CVA” means a voluntary arrangement in relation to a company made under Part 1 of the Act;

• “debt” as it relates to administration, means any of the following— any debt or liability to which the company is subject at the relevant date; any debt or liability to which the company may become subject after the relevant date by reason of any obligation incurred before that date; any interest provable as mentioned in rule 3.111; and for the purposes of the definition of debt, “relevant date” means— in the case of an administration which was not immediately preceded by a winding up, the date on which the company entered administration; and in the case of an administration which was immediately preceded by a winding up, the date on which the company went into liquidation.

• “decision date” and “decision procedure” are to be interpreted in accordance with rule 5.2;

• [Note: “deemed consent procedure” is defined in section 246ZF[^f00009]];

• “deliver” and “delivery” are to be interpreted in accordance with Chapter 9 of Part 1 of these Rules;

• “deliver to the creditors” and similar expressions in these Rules and the Act are to be interpreted in accordance with rule 1.33;

• “document” includes a written notice or statement or anything else in writing capable of being delivered to a recipient;

• [Note: “the EU Regulation” is defined in section 436[^f00010] as “Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings[^f00011]”];

• [Note: “the Gazette” has the meaning given in section 251];

• “Gazette notice” means a notice which is, has been, or is to be gazetted;

• “to gazette” means to advertise in the Gazette, whether electronically or otherwise;

• [Note: “hire-purchase agreement” is defined in section 436(1); and is supplemented by paragraph 1 of Schedule A1 (company voluntary arrangements) for the purposes of that Schedule and by paragraph 111(1) of Schedule B1 (administration) for the purposes of that Schedule];

• “identification details” and similar references to information identifying persons, insolvency proceedings etc. are to be interpreted in accordance with rule 1.7;

• “insolvent estate” means the company’s assets;

• “IP number” means the number assigned to an office-holder as an insolvency practitioner by the Secretary of State;

• “local creditor” has the same meaning as in Article 2 of the EU Regulation;

• “main proceedings” means proceedings opened in accordance with Article 3(1) of the EU Regulation and falling within the definition of insolvency proceedings in Article 2(4) of the EU Regulation and which— in relation to Scotland, are set out in Annex A to that Regulation under the heading “United Kingdom”; and in relation to another member State, are set out in Annex A under the heading relating to that member State;

• “meeting” in relation to a company’s creditors means either a “physical meeting” or a “virtual meeting”;

• “member State liquidator” means a person falling within the definition of “insolvency practitioner” in Article 2(5) of the EU Regulation appointed in proceedings to which the EU Regulation applies in a member State other than the United Kingdom;

• [Note: “nominee” is defined in section 1(2) in relation to company voluntary arrangements];

• “non-EU proceedings” means insolvency proceedings which are not main, secondary or territorial proceedings;

• “office-holder” means a person who under the Act or these Rules holds an office in relation to insolvency proceedings and includes a nominee;

• “official rate” is the rate of interest on a sheriff court decree or extract under section 9 of the Sheriff Courts (Scotland) Extracts Act 1892[^f00012] (as it may be amended by section 4 of the Administration of Justice (Scotland) Act 1972)[^f00013];

• “physical meeting” has the meaning given by rule 5.2;

• “prescribed part” has the same meaning as in section 176A(2)(a)[^f00014] and the Insolvency Act 1986 (Prescribed Part) Order 2003[^f00015];

• “progress report” means a report which complies with rules 3.93 and 3.94;

• [Note: “property” is defined in section 436(1)];

• “proxy” and “proxy-holder” are to be interpreted in accordance with rule 6.2;

• “qualified to act as an insolvency practitioner”, in relation to a company, is to be interpreted in accordance with Part 13 of the Act;

• [Note: “records” are defined in section 436(1)];

• “secondary proceedings” means proceedings opened in accordance with Article 3(2) and (3) of the EU Regulation and falling within the definition of insolvency proceedings in Article 2(4) of the EU Regulation and which— in relation to Scotland, are set out in Annex A to that Regulation under the heading “United Kingdom”; and in relation to another member State are set out in Annex A under the heading relating to that member State;

• “serve” and “service” are to be interpreted in respect of a particular document by reference to the Rules of Court;

• “standard contents” means— for a Gazette notice, the standard contents set out in Chapter 5 of Part 1; for a notice to be advertised other than in the Gazette, the standard contents set out in Chapter 6 of Part 1; for a document to be delivered to the registrar of companies, the standard contents set out in Chapter 7 of Part 1; and for notices to be delivered to other persons, the standard contents set out in Chapter 8 of Part 1;

• “standard fee for copies” means 15 pence per A4 or A5 page or 30 pence per A3 page;

• “statement of claim” is to be interpreted in accordance with rule 3.105;

• “statement of proposals” means a statement made by an administrator under paragraph 49 of Schedule B1[^f00016] setting out proposals for achieving the purpose of an administration;

• “territorial proceedings” means proceedings opened in accordance with Article 3(2) and (4) of the EU Regulation and falling within the definition of insolvency proceedings in Article 2(4) of that Regulation and which— in relation to Scotland, are set out in Annex A to the EU Regulation under the heading “United Kingdom”; and in relation to another member State, are set out in Annex A under the heading relating to that member State;

• “venue” in relation to any proceedings, attendance before the court, decision procedure or meeting means the time, date and place or platform for the proceedings, attendance, decision procedure or meeting;

• “virtual meeting” has the meaning given by rule 5.2;

• [Note: “writing” is to be construed in accordance with section 436B[^f00017]];

• “written resolution” in respect of a private company means a written resolution passed in accordance with Chapter 2 of Part 13 of the Companies Act.

• (2) An appointed person in relation to a company must be—

• (a) qualified to act as an insolvency practitioner in relation to that company, or

• (b) a person experienced in insolvency matters who is—

• (i) a member or employee of the office-holder’s firm, or

• (ii) an employee of the office-holder.

• (3) A fee or remuneration is chargeable when the work to which it relates is done.

CHAPTER 3 — Calculation of time periods

Periods of time expressed in days

1.3

• (1) This rule applies to the calculation of a period of time expressed in days.

• (2) A period of time expressed as a number of days is to be computed as clear days.

• (3) In this rule, “clear days” means that in computing the number of days—

• (a) the day on which the period begins; and

• (b) if the end of the period is defined by reference to an event, the day on which that event occurs,

are not included.

Periods of time expressed in months

1.4

• (1) This rule applies to the calculation of a period of time expressed in months.

• (2) The beginning and the end of a period expressed in months are to be determined as follows—

• (a) if the beginning of the period is specified—

• (i) the month in which the period ends is the specified number of months after the month in which it begins; and

• (ii) the date in the month on which the period ends is—

• (aa) the day before the date corresponding to the date in the month on which it begins, or

• (bb) if there is no such date in the month in which it ends, the last day of that month;

• (b) if the end of the period is specified—

• (i) the month in which the period begins is the specified number of months before the month in which it ends; and

• (ii) the date in the month on which the period begins is—

• (aa) the day after the date corresponding to the date in the month on which it ends, or

• (bb) if there is no such date in the month in which it begins, the last day of that month.

CHAPTER 4 — Form and content of documents

Requirement for writing and form of documents

1.5

• (1) A notice or statement must be in writing unless the Act or these Rules provide otherwise.

• (2) A document in electronic form must be capable of being—

• (a) read by the recipient in electronic form; and

• (b) reproduced by the recipient in hard-copy form.

Authentication

1.6

• (1) A document in electronic form is authenticated—

• (a) if the identity of the sender is confirmed in a manner specified by the recipient; or

• (b) where the recipient has not so specified, if the communication contains or is accompanied by a statement of the identity of the sender and the recipient has no reason to doubt the truth of that statement.

• (2) A document in hard copy form is authenticated if it is signed.

• (3) If a document is authenticated by the signature of an individual on behalf of—

• (a) a body of persons, the document must also state the position of that individual in relation to the body;

• (b) a body corporate of which the individual is the sole member, the document must also state that fact.

Information required to identify persons and insolvency proceedings etc.

1.7

• (1) Where the Act or these Rules require a document to identify, or to contain identification details in respect of, a person or insolvency proceedings, or to provide contact details for an office-holder, the information set out in the table must be given.

• (2) Where a requirement relates to a proposed office-holder, the information set out in the table in respect of an office-holder must be given with any necessary adaptations.