Corporate Insolvency & Calman Recommendations

1. Corporate Insolvency & Calman Recommendations Impact for Corporate Insolvency in Scotland CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

2. Corporate Insolvency & Calman Recommendations • Introduction • Background • What is currently happening • Questions and discussion of the issues • Agree main issues to feedback • Close CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

3. Corporate Insolvency Background • Corporate insolvency law is partly reserved and partly devolved • Under the Scotland Act 1998: • the general legal effect of liquidation is a reserved matter, but the process and effects of liquidation are devolved • receivership is devolved, BUT • administration is reserved • Insolvency (Scotland) Rules 1986 • AiB has had policy responsibility since 2007 CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

4. Corporate Insolvency Scottish Law Commissioner Professor George Gretton’s submission to the Calman Commission (1 May 2009) – • The reserved/devolved line of demarcation, in relation to corporate insolvency, seems to me very rationally drawn by the Scotland Act. If any change were to be made, it would, in my view, be for complete devolution of this area. • The Northern Ireland Act devolves the whole of insolvency law, corporate as well as personal. The case for devolution in this area is evidently stronger for Scotland than it is for Northern Ireland. CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

5. Calman Report The Final Report of the Commission on Scottish Devolution (“Serving Scotland Better”, June 2009) makes the following recommendation – • RECOMMENDATION 5.23: The UK Insolvency Service, with appropriate input from the relevant department(s) of the Scottish Government, should be made responsible for laying down the rules to be applied by insolvency practitioners on both sides of the border. This should be achieved by UK legislation. CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

6. Calman Report The Calman Commission concluded that the current devolved arrangements for corporate insolvency lead to the following problems – • There could be undesirable differences in the processes governing winding up depending on the jurisdiction under which that winding up happens (para. 5.269) • Company law as a whole is reserved (para. 5.273) • The process of amending insolvency rules was unnecessarily duplicated in Scotland and that there is a risk of divergence in policy and practice (para. 5.274) • There is a lack of clarity in the responsibility for drawing up insolvency rules, unnecessary and confusing divergences and unnecessary and damaging delays in introducing Scottish rules (para 5.275) CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

7. Corporate Insolvency Since 2007 - updating rules & AiB website What is currently happening: • Looking at Regulations to disentangle corporate and personal regimes • Examining what needs to be done to modernise the Insolvency (Scotland) Rules 1986 • Calman Report - Potential Scotland Bill – change responsibilities CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

8. Corporate Insolvency • We agree that there should be common and consistent provisions for company insolvency across the UK • We do not accept that there should not be any differences • The development of Scottish Rules must be made in the context of the different foundations. CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

9. Corporate Insolvency How do we take this forward? • Amend the Scottish Insolvency Rules to modernise procedures • Consider whether there is a case for the introduction of a liquidator of last resort CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

10. Feedback What can we take away from this workshop? • Main issues • Key benefits • Future activity CLAIRE KEGGIE | CORPORATE INSOLVENCY & CALMAN | NOV 2010

11. Claire Keggie, Head of Policy and Compliance 0300 200 2699, Claire.Keggie@aib.gsi.gov.uk THANK YOU 1 PENNYBURN ROAD, KILWINNING, AYRSHIRE, KA13 6SA T 0300 200 2600 F 0300 200 2601 W WWW.AIB.GOV.UK