The Insolvency (Scotland) Amendment Rules 2010

• Citation: S.I. 2010/688
• Sections: 124

Section 1 Citation, commencement and interpretation

These Rules may be cited as the Insolvency (Scotland) Amendment Rules 2010 and come into force on 6th April 2010.

Section 2 Citation, commencement and interpretation

In these Rules “the principal Rules” means the Insolvency (Scotland) Rules 1986 .

Section 3 Amendments to the principal Rules

The principal Rules are amended in the manner provided for in Schedule 1 to these Rules.

Section 4 Transitional provisions – general

(1) The amendments to the principal Rules by these Rules apply as provided by paragraphs (2) and (3), except where Rules 5 and 6 provide differently.

(2) They apply where a person agrees to act as nominee in respect of a proposal for a company voluntary arrangement on or after 6th April 2010.

(3) They apply where a company enters administration on or after 6th April 2010, except where—

(a) it enters administration by virtue of an administration order under paragraph 10 of Schedule B1 to the Insolvency Act 1986 on an application made before 6th April 2010;

(b) the administration is immediately preceded by a voluntary liquidation in respect of which the resolution to wind up was passed before 6th April 2010; or

(c) the administration is immediately preceded by a liquidation on the making of a winding‑up order on a petition which was presented before 6th April 2010.

Section 5 Revocations and amendments relating to new provisions in the Act

The amendments made by the following paragraphs of Schedule 1 to these Rules apply on and after 6th April 2010 in all cases, namely paragraphs 2, 3, 4, 22, 27 (in so far as that paragraph inserts new Rules 1.16C to 1.16E), 68 (in so far as that paragraph inserts new Rules 2.25B to 2.25E), 70 (in so far as that paragraph inserts a new Rule 2.26B), 83, 85, 92, 94 and 114.

Section 6 Amendments relating to preparation of proposals for voluntary arrangements

The amendments made by paragraphs 5, 11 and 15 of Schedule 1 to these Rules apply where a copy of the proposal for a company voluntary arrangement is delivered to the intended nominee on or after 6th April 2010.

Section 1

In Rule 0.2(1) before “territorial proceedings” insert—

“Standard content” means—

in relation to a notice to be published or advertised in the Edinburgh Gazette, the contents specified in Rule 7.21A; and

in relation to a notice to be advertised in any other way, the contents specified in Rule 7.21B;

Section 2

Insert after Rule 0.2(2)—

(3) A document or information given, delivered or sent in hard copy form under any Rule in Parts 1 and 2, or any other Rule applied by those parts, is sufficiently authenticated if it is signed by the person sending or supplying it.

(4) A document or information given, delivered or sent in electronic form under any Rule in Parts 1 and 2, or any other Rule applied by those parts, is sufficiently authenticated—

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

(b) where no such manner has been specified by the recipient, 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.

Section 3

After Rule 1.1 insert—

THE GIVING OF NOTICE AND THE SUPPLY OF DOCUMENTS

Application

(1.1A)

(1) Subject to paragraph (2), this Chapter applies where a notice or other document is required to be given, delivered or sent under this Part of these Rules.

(2) This Chapter does not apply to—

(a) the lodging of any application, or other document, with the court;

(b) the service of any application, or other document, lodged with the court;

(c) the service of any order of the court; or

(d) the submission of documents to the registrar of companies.

Electronic delivery

(1.1B)

(1) Unless in any particular case some other form of delivery is required by the Act or these Rules or any order of the court, a notice or other document may be given, delivered or sent by electronic means provided that the intended recipient of the notice or other document has—

(a) consented (whether in the specific case or generally) to electronic delivery (and has not revoked that consent); and

(b) provided an electronic address for delivery.

(2) Where a nominee or supervisor gives, sends or delivers a notice or other document to any person by electronic means, it must contain or be accompanied by a statement that the recipient may request a hard copy of the notice or document, and specify a telephone number, e-mail address and postal address that may be used to make such a request.

(3) Where a hard copy of the notice or other document is requested it must be sent within 5 business days of receipt of the request by the nominee or supervisor, who may not make a charge for sending it in that form.

(4) In the absence of evidence to the contrary, a notice or other document shall be presumed to have been delivered where—

(a) the sender can produce a copy of the electronic message which –

(i) contained the notice or other document, or to which the notice or other document was attached; and

(ii) shows the time and date the message was sent; and

(b) that electronic message was sent to the address supplied under paragraph (1)(b).

(5) A message sent electronically is deemed to have been delivered to the recipient no later than 9.00 am on the next business day after it was sent.

Use of websites by nominee or supervisor

(1.1C)

(1) This Rule applies for the purpose of section 246B .

(2) A nominee or supervisor required to give, deliver or send a document to any person may (other than in a case where personal service is required) satisfy that requirement by sending that person a notice—

(a) stating that the document is available for viewing and downloading on a website;

(b) specifying the address of that website together with any password necessary to view and download the document from that website; and

(c) containing a statement that the recipient of the notice may request a hard copy of the document, and specifying a telephone number, e-mail address and postal address which may be used to make such a request.

(3) Where a notice to which this Rule applies is sent, the document to which it relates must—

(a) be available on the website for a period of not less than 3 months after the date on which the notice is sent; and

(b) be in such a format as to enable it to be downloaded from the website within a reasonable time of an electronic request being made for it to be downloaded.

(4) Where a hard copy of the document is requested it must be sent within 5 business days of the receipt of the request by the nominee or supervisor, who may not make a charge for sending it in that form.

(5) Where a document is given, delivered or sent to a person by means of a website in accordance with this Rule, it is deemed to have been delivered—

(a) when the document was first made available on the website, or

(b) if later, when the notice under paragraph (2) was delivered to that person.

Special provision on account of expense as to website use

(1.1D)

(1) Where the court is satisfied that the expense of sending notices in accordance with Rule 1.1C would, on account of the number of persons entitled to receive them, be disproportionate to the benefit of sending notices in accordance with that Rule, it may order that the requirement to give, deliver or send a relevant document to any person may (other than in a case where personal service is required) be satisfied by the nominee or supervisor sending each of those persons a notice—

(a) stating that all relevant documents will be made available for viewing and downloading on a website;

(b) specifying the address of that website together with any password necessary to view and download a relevant document from that site; and

(c) containing a statement that the person to whom the notice is given, delivered or sent may at any time request that hard copies of all, or specific, relevant documents are sent to that person, and specifying a telephone number, e-mail address and postal address which may be used to make that request.

(2) A document to which this Rule relates must—

(a) be available on the website for a period of not less than 12 months from the date when it was first made available on the website or, if later, from the date upon which the notice was sent, and

(b) be in such a format as to enable it to be downloaded from the website within a reasonable time of an electronic request being made for it to be downloaded.

(3) Where hard copies of relevant documents have been requested, they must be sent by the nominee or supervisor—

(a) within 5 business days of the receipt by the nominee or supervisor of the request to be sent hard copies, in the case of relevant documents first appearing on the website before the request was received, or

(b) within 5 business days from the date a relevant document first appears on the website, in all other cases.

(4) A nominee or supervisor must not require a person making a request under paragraph (3) to pay a fee for the supply of the document.

(5) Where a relevant document is given, delivered or sent to a person by means of a website in accordance with this Rule, it is deemed to have been delivered—

(a) when the relevant document was first made available on the website, or

(b) if later, when the notice under paragraph (1) was delivered to that person.

(6) In this Rule a relevant document means any document which the nominee or supervisor is first required to give, deliver or send to any person after the court has made an order under paragraph (1).

Section 4

Omit Rule 1.2.

Section 5

In Rule 1.3(2)—

(a) omit “and” after paragraph (o); and

(b) after paragraph (p) insert—

; and

(q) such other matters (if any) as the directors consider appropriate for ensuring that members and creditors are enabled to reach an informed decision on the proposal.

Section 6

In Rule 1.3(3) for “former’s” substitute “nominee’s”.

Section 7

For Rule 1.5(1) substitute—

(1) The directors shall, at the same time as the proposal is delivered to the nominee, deliver to the nominee a statement of the company’s affairs.

Section 8

In Rule 1.5(4)—

(a) for “their” substitute “the relevant director’s”; and

(b) for “two or more directors of the company or by the company secretary and at least one director (other than the secretary himself)” substitute “one director”.

Section 9

In Rule 1.6(3) for “him access to the company’s accounts and records”, substitute “the nominee such access to the company’s accounts and records as the nominee may require”.

Section 10

In paragraphs (1) and (2) of Rule 1.8 for “7” substitute “5 business”.

Section 11

In Rule 1.9(1) omit “less than 14, nor”.

Section 12

In Rule 1.9(2) after “lodged” insert “and shall state the effect of Rule 1.16A(2) to (4),”.

Section 13

In Rule 1.9(2)—

(a) omit “and” after paragraph (b); and

(b) after paragraph (c) insert—

;and

(d) forms of proxy.

Section 14

After Rule 1.9(2) insert—

(3) Notices calling the meetings shall be sent by the nominee at least 14 days before the day fixed for them to be held—

(a) in the case of the creditors’ meeting, to all the creditors specified in the statement of affairs, and any other creditors of the company of whose address the nominee is aware; and

(b) in the case of the meeting of members of the company, to all persons who are, to the best of the nominee’s belief, members of it.

Section 15

In Rule 1.10—

(a) in paragraph (a), after “in administration” insert “or liquidation”; and

(b) omit paragraph (b).

Section 16

For Rule 1.11(1) substitute—

(1) Notices calling meetings under section 3(2) shall be sent by the responsible insolvency practitioner at least 14 days before the day fixed for them to be held—

(a) in the case of the creditors’ meeting, to all the creditors specified in the statement of affairs, and any other creditors of the company of whose address the responsible insolvency practitioner is aware; and

(b) in the case of the meeting of members of the company, to all persons who are, to the best of the responsible insolvency practitioner’s belief, members of it.

Section 17

In Rule 1.11(2)—

(a) delete “and” after paragraph (a); and

(b) after paragraph (b), insert—

(c) a statement of the effect of Rule 1.16A(2) to (4); and

(d) forms of proxy.

Section 18

Omit Rule 1.13.

Section 19

In Rule 1.14(1) for “person summoning the meetings (“the convenor”) shall” substitute “nominee must”.

Section 20

In Rule 1.14(3) for “7” substitute “5 business”.

Section 21

After Rule 1.14(3) insert—

(4) Meetings shall, in all cases, be summoned for commencement between 10.00 and 16.00 hours on a business day.

Section 22

After Rule 1.14 insert—

Remote Attendance at Meetings

(1.14ZA)

(1) This Rule applies to a request to the nominee of a meeting under section 246A(9) to specify a place for the meeting.

(2) The request must be accompanied by—

(a) in the case of a request by creditors, a list of the creditors making (or concurring with) the request and the amounts of those creditors’ respective debts in the insolvency proceedings in question,

(b) in the case of a request by members, a list of the members making (or concurring with) the request and those members’ voting rights, and

(c) from each person concurring, written confirmation of that person’s concurrence.

(3) The request must be made within 7 business days of the date on which the nominee sent the notice of the meeting in question.

(4) Where the nominee considers that the request has been properly made in accordance with the Act and these Rules, the nominee must—

(a) give notice (to all those previously given notice of the meeting)—

(i) that the meeting is to be held at a specified place, and

(ii) whether the date and time of the meeting are to remain the same or not;

(b) specify a time, date and place for the meeting, the date of which must not be more than 28 days after the original date for the meeting; and

(c) give at least 14 days notice of the time, date and place of the meeting (to all those previously given notice of the meeting),

and the notices required by subparagraphs (a) and (c) may be given at the same or different times.

(5) Where the nominee has specified a place for the meeting in response to a request to which this Rule applies, the chairman of the meeting must attend the meeting by being present in person at that place.

Section 23

After Rule 1.14A insert—

Chairman of meeting as proxy holder

(1.14AA) At any meeting, the chairman shall not, by virtue of any proxy held by him, vote to increase or reduce the amount of the remuneration or expenses of the nominee or the supervisor of the proposed arrangement, unless the proxy specifically directs him to vote in that way.

Section 24

At the end of Rule 1.15A(3) insert—

(4) A creditor is entitled to vote at any meeting if the creditor, either at the meeting or before it, has submitted the creditor’s claim to the responsible insolvency practitioner and the creditor’s claim has been accepted in whole or in part.

Section 25

After Rule 1.15A insert—

Entitlement to vote (members)

(1.15AA)

(1) Members of a company at their meeting shall vote according to the rights attaching to their shares in accordance with the company’s articles of association.

(2) Reference in this Rule to a person’s shares include any other interests which that person may have as a member of the company.

Section 26

After Rule 1.16(5) insert—

(6) During a meeting, the chairman may, in the chairman’s discretion and without an adjournment, declare the meeting suspended for any period up to one hour.

Section 27

After Rule 1.16 insert—

Requisite Majorities at Creditors’ Meetings

(1.16A)

(1) Subject to paragraph (2), a resolution is passed at a creditors’ meeting when a majority (in value) of those present and voting in person or by proxy have voted in favour of it.

(2) A resolution to approve the proposal or a modification is passed when a majority of three quarters or more (in value) of those present and voting in person or by proxy have voted in favour of it.

(3) There is to be left out of account a creditor’s vote in respect of any claim or part of a claim-

(a) where written notice of the claim was not given, either at the meeting or before it, to the chairman or nominee;

(b) where the claim or part is secured;

(c) where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note, unless the creditor is willing—

(i) to treat the liability to the creditor on the bill or note of every person who is liable on it antecedently to the company, and who has not been made bankrupt or had their estate sequestrated (or in the case of a company, which has not gone into liquidation), as a security in the creditor’s hands; and

(ii) to estimate the value of the security and (for the purpose of entitlement to vote, but not of any distribution under the arrangement) to deduct it from the creditor’s claim.

(4) Any resolution is invalid if those voting against it include more than half in value of the creditors—

(a) to whom notice of the meeting was sent;

(b) whose votes are not to be left out of account under paragraph (3); and

(c) who are not, to the best of the chairman’s belief, persons connected with the company.

(5) It is for the chairman of the meeting to decide whether under this Rule—

(a) a vote is to be left out of account in accordance with paragraph (3), and

(b) a person is a connected person for the purpose of paragraph (4)(c),

and in relation to the second of these two cases the chairman is entitled to rely on the information provided by the company’s statement of affairs or otherwise in accordance with this Part of the Rules.

(6) If the chairman uses a proxy contrary to Rule 1.14AA the chairman’s vote with that proxy does not count towards any majority under this Rule.

(7) The chairman’s decision on any matter under the Rule is subject to appeal to the court by any creditor and paragraphs (5) to (7) of Rule 1.15B apply as regards such an appeal.

Requisite Majorities at Company Meetings

(1.16B)

(1) Subject as follows and to any express provision made in the articles of association of the company, at a meeting of the members of the company any resolution is to be regarded as passed if voted for by more than one-half in value of the members present in person or by proxy and voting on the resolution.

(2) The value of members is determined by reference to the number of votes conferred on each member by the company’s articles.

(3) If the chairman uses a proxy contrary to Rule 1.14AA, the chairman’s vote with that proxy does not count towards any majority under this Rule.

Action where person excluded

(1.16C)

(1) In this Rule and Rules 1.16D and 1.16E an “excluded person” means a person who—

(a) has taken all steps necessary to attend a meeting under the arrangements put in place to do so by the convener of the meeting under section 246A(6); and

(b) those arrangements do not permit that person to attend the whole or part of that meeting.

(2) Where the chairman becomes aware during the course of the meeting that there is an excluded person, the chairman may—

(a) continue the meeting;

(b) declare the meeting void and convene the meeting again; or

(c) declare the meeting valid up to the point where the person was excluded and adjourn the meeting.

(3) Where the chairman continues the meeting, the meeting is valid unless—

(a) the chairman decides in consequence of a complaint under Rule 1.16E to declare the meeting void and hold the meeting again; or

(b) the court directs otherwise.

(4) Without prejudice to paragraph (2), where the chairman becomes aware during the course of the meeting of an excluded person, the chairman may, in the chairman’s discretion and without an adjournment, declare the meeting suspended for any period up to one hour.

Indication to excluded person

(1.16D)

(1) A person who claims to be an excluded person may request an indication of what occurred during the period of that person’s claimed exclusion (the “indication”).

(2) A request under paragraph (1) must be made as soon as reasonably practicable, and, in any event, no later than 4 p.m. on the business day following the day on which the exclusion is claimed to have occurred.

(3) A request under paragraph (1) must be made to—

(a) the chairman, where it is made during the course of the business of the meeting; or

(b) the nominee or supervisor where it is made after the conclusion of the business of the meeting.

(4) Where satisfied that the person making the request is an excluded person, the person to whom the request is made must give the indication as soon as reasonably practicable and, in any event, no later than 4. p.m. on the day following the request in paragraph (1).

Complaint

(1.16E)

(1) Any person who—

(a) is, or claims to be, an excluded person; or

(b) attends the meeting (in person or by proxy) and considers that they have been adversely affected by a person’s actual, apparent or claimed exclusion,

(“the complainant”) may make a complaint.

(2) The person to whom the complaint must be made (“the relevant person”) is—

(a) the chairman, where it is made during the course of the meeting; or

(b) the nominee or supervisor, where it is made after the meeting.

(3) The relevant person must—

(a) consider whether there is an excluded person;

(b) where satisfied that there is an excluded person, consider the complaint; and

(c) where satisfied that there has been prejudice, take such action as the relevant person considers fit to remedy the prejudice.

(4) Paragraph (5) applies where—

(a) the relevant person is satisfied that the complainant is an excluded person;

(b) during the period of the person’s exclusion—

(i) a resolution was put to the meeting; and

(ii) voted on; and

(c) the excluded person asserts how the excluded person intended to vote on the resolution.

(5) Subject to paragraph (6), where satisfied that the effect of the intended vote in paragraph (4), if cast, would have changed the result of the resolution, the relevant person must—

(a) count the intended vote as being cast in accordance with the complainant’s stated intention;

(b) amend the record of the result of the resolution; and

(c) where those entitled to attend the meeting have been notified of the result of the resolution, notify them of the change.

(6) Where satisfied that more than one complainant in paragraph (4) is an excluded person, the relevant person must have regard to the combined effect of the intended votes.

(7) A complaint must be made as soon as reasonably practicable and, in any event, by 4 p.m. on the business day following—

(a) the day on which the person was excluded; or

(b) where an indication is requested under Rule 1.16D, the day on which the complainant received the indication.

(8) The relevant person must notify the complainant in writing of any decision.

(9) A complainant who is not satisfied by the action of the relevant person may apply to the court for a direction to be given to the relevant person as to the action to be taken in respect of the complaint, and any application must be made no more than 2 business days from the date of receiving the decision of the relevant person.

Section 28

In Rule 1.17(3) before “days” insert “business”.

Section 29

In Rule 1.17(4) for “immediately” substitute “as soon as reasonably practicable”.

Section 30

In Rule 1.18(1) for “may”, where it first occurs, substitute “must”.

Section 31

In Rule 1.18A(5) for “7” substitute “5 business”.

Section 32

In paragraphs (4)(b) and (5) of Rule 1.20 for “7” substitute “5 business”.

Section 33

For Rule 1.21 substitute—

Supervisor’s accounts

(1.21)

(1) This Rule applies where the voluntary arrangement authorises or requires the supervisor—

(a) to carry on the business of the company or trade on its behalf or in its name;

(b) to realise assets of the company; or

(c) otherwise to administer or dispose of any of its funds.

(2) The supervisor must keep accounts and records of the supervisor’s acts and dealings in, and in connection with, the arrangement, including in particular records of all receipts and payments of money.

(3) The supervisor must preserve any accounts and records in paragraph (2) which—

(a) were kept by any other person who has acted as supervisor of the arrangement; and

(b) are in the supervisor’s possession.

Supervisor’s reports

(1.21A)

(1) Subject to paragraph (2), the supervisor must, in respect of each period of 12 months ending with the anniversary of the commencement of the arrangement, send within 2 months of the end of that period a report on the progress and prospects for the full implementation of the voluntary arrangement to—

(a) the registrar of companies;

(b) the company;

(c) all of the company’s creditors who are bound by the voluntary arrangement of whose address the supervisor is aware;

(d) subject to paragraph (4) below, the members of the company; and

(e) if the company is not in liquidation, the company’s auditors (if any) for the time being.

(2) The supervisor is not required to send a report under paragraph (1), if an obligation to send a final report under Rule 1.23 arises in the period of 2 months mentioned in paragraph (1).

(3) Where the supervisor is authorised or required to do any of the things mentioned in Rule 1.21 (1)(a) to (c), the report required to be sent pursuant to paragraph (1), must include or be accompanied by—

(a) an abstract of receipts and payments required to be recorded by virtue of Rule 1.21(2); or

(b) where there have been no such receipts and payments, a statement to that effect.

(4) The court may, on application by the supervisor, dispense with the sending under this Rule of abstracts or reports to members of the company, either altogether or on the basis that the availability of the abstract or report to members is to be advertised by the supervisor in a specified manner.

Section 34

In Rule 1.27(1)—

(a) for “no later than 7 days after” substitute “at the same time as”; and

(b) omit “or such longer time as he may allow”.

Section 35

In Rule 1.27(4)—

(a) for “their” substitute “the relevant director’s”; and

(b) for “two or more directors of the company, or by the company secretary and at least one director (other than the secretary himself)” substitute “one director”.

Section 36

After Rule 1.30(2) insert—

(2A) In addition to the standard content, notices published under paragraph (2) must state—

(a) the nature of the business of the company;

(b) that a moratorium under section 1A has come into force; and

(c) the date upon which the moratorium came into force.

Section 37

In Rule 1.30(3) for “he” substitute “and address the nominee”.

Section 38

In Rule 1.31(2) for “certified copy interlocutor” substitute “copy”.

Section 39

After Rule 1.32(1) insert—

(1A) In addition to the standard content, notices published under paragraph (2) must state—

(a) the nature of the business of the company;

(b) that a moratorium under section 1A has come to an end; and

(c) the date upon which the moratorium came to an end.

Section 40

In Rule 1.32(2) for “he” substitute “and address the nominee”.

Section 41

In Rule 1.35(d) for “he” substitute “and address the nominee”.

Section 42

In paragraphs (1) and (2) of Rule 1.36 for “7” substitute “5 business”.

Section 43

In Rule 1.36(3) for “his consent to act” substitute “that the replacement nominee—

(a) consents to act; and

(b) is qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company.

Section 44

In Rule 1.38 for “7” substitute “5 business”.