Insolvency (Scotland) Rules: Nomination Process

The new Rules will come into force on Saturday 6 April 2019. We will be keeping you posted where we can on interpretations and issues in the period of their introduction.

First up, we’ve walked through the nomination process to have a look at the timescales involved where an interim liquidator, appointed on 8 April 2019, seeks and obtains one nomination as liquidator, and goes back to the creditors for a decision by way of deemed consent. We have assumed that the interim liquidator in this example issues notices at the last possible occasion, and uses 2nd class post wherever possible. The table below outlines what we think that process looks like.

Event Date or deadline Statutory Reference Narrative
Winding Up Order (WUO) Monday 08/04/2019 S138 Must as soon as practicable seek nomination within 28 days beg within WUO.  Therefore 28 days in this example expires on Sunday 5 May. It’s possible that that RPBs may take view on an  IL always sending out at last possible time given s138 requires nominations as soon as practicable.  Can ignore Easter bank holidays, since requirement is 28 days (not business days) from WUO.
Last date for posting report and nomination request: using 2nd class post 29/4/2019 R1.38 Deemed to have been delivered 4 business days after the date of sending.

 

Last date report and notice can be received by creditors Friday 3/5/2019 Report and nomination notice received by creditors on Friday (since Sunday  not a business day)
Nominations received from Creditors Mon 13/5/2019 R5.22(5) Has to be received within 5 business days of the date of the notice issued requesting nominations (if they are sending it 2nd class, they would have to post it Tues 7th May latest (since Mon 6th May is a Bank Holiday) to ensure received by IL in time)
Decision date expiry Monday 3/6/2019 R5.22(9) The decision date has to be no later than 21 days after the date of receiving nominations – nomination date 13/5/2019 + 21 days = Monday 3 June 2019 (can ignore bank holiday on 27 May since Rules refer to 21 days and not business days).
Therefore, latest date for issue of circular, giving a minimum of 14 days’ notice, to include 2 business days for 1st  class.  (note posting 2nd class here doesn’t give enough clear notice) Wed

15/5/2019 deemed to be delivered Fri  17/5/2019 at latest)

R5.22(10) Giving at least 14 days’ notice + 4 business days for 2nd class post not to include the date of delivery and the date of the decision. (Rule 1.3)  In effect, on the next business day following the expiry of the nomination period, using 2nd class post doesn’t allow 14 clear days’ notice of the decision to be issued – since Rule 1.3 defines clear days not to include the date of sending or the date of the event.  On this occasion, looks like you are going to have to use first class post.
Last date for creditors to exercise 10:10:10 objection and request a physical meeting Fri 24/5/2019 R8.8 Creditors may within 5 business days from the date of delivery of the notice require a physical meeting to be held. The convenor then has 3 business days from the threshold for requests being received to send notice in accordance with the Rules, giving creditors 14 days’ notice of the meeting. That would have to take into account the bank holiday on Monday 27 May.
Latest date for decision (the backstop) Thu 6/6/2019 R5.22 (7) where a decision is sought under r5.22(6) the decision date must be not more than 60 days from the date of the winding up order.

Most of you will have diary systems and prompts to assist you with the planning of your processes. However, this exercise demonstrates that you can’t leave everything to the last minute and issue by 2nd class post. You simply won’t meet your deadlines.

This is a good example of why putting everything on a website going forward will be advantageous, and understanding the implications of delivery (rather than sending).

How we can assist you

We’ve been examining in detail the new legal requirements and their practical implications. We can offer bespoke in-house training, Rules-compliant document packs and checklists, and compliance support.

For further information about how we can assist you in adjusting to the changes brought about by the new Rules, contact enquiries@insolvencysupportservices.com