Insolvency & Restructuring

Insolvency is the area in which assuming that Great Britain has a single legal system causes the most damage. The primary corporate insolvency statute does apply across Great Britain, but the procedural rules governing how each process runs in Scotland are separate Scottish instruments, and the courts are the Court of Session and the sheriff court.

Administration is available in Scotland. What is not available is the English procedure of that name. The route into it, the court, the rules of process and a good deal of the case law are different, and English authority has to be checked against the Scottish position and not adopted. The same caution applies to liquidation, where Scotland has its own steps and its own officeholder roles.

Personal and partnership insolvency is different again and is wholly Scottish. The process is sequestration and not a bankruptcy petition, it is administered by the Accountant in Bankruptcy, and the alternatives, being protected trust deeds and the statutory debt arrangement scheme, have no direct English counterpart.

For directors

The useful time to take advice is before the position becomes irretrievable, because that is while the options still exist. As solvency comes into question the interests directors must consider shift towards creditors, and decisions taken after that point are judged differently afterwards. We advise on what may be paid and to whom, on the risks of continuing to trade, on personal exposure including guarantees, and on what must be documented at the time in order to be of use later.

We are solicitors and not insolvency practitioners, and we take no appointments. The advice you receive from us is legal advice about your own position.

For lenders and creditors

Enforcement in Scotland turns on whether the security was properly constituted and registered in the first place, and standard securities and floating charges are Scottish creatures with Scottish requirements. For an unsecured creditor the question is usually whether diligence is worth doing and whether it will survive a subsequent formal process, since insolvency can cut across diligence already carried out.

For purchasers

Buying a business or an asset out of a formal process means buying with almost no warranties, from an officeholder who will give none. The protection has to come from diligence done quickly, from title examined properly, and from understanding what is actually being sold, which in a business built on contracts and intellectual property is often less than the buyer assumed.