Over the last year, there has been many fascinating cases to follow & plenty of legal developments which have showcased many of the challenges faced in the insolvency world. As the end of 2023 approaches, I have taken some time to reflect on some of the year’s most prominent decisions.
In February, the Inner House looked at the interconnection between a binding contract entered into by a company pre-liquidation and the duties of the liquidator upon appointment. We were reminded that a contract remains binding on the company without express provision to the contrary; a liquidator can choose to adopt the contract, or otherwise repudiate the same, but may find themselves liable in damages for any breach [Colonnade Properties Limited & Others v. Beechmount Limited (in Liquidation), [2023] CSIH 10].
The scrutiny of the remuneration of officeholders & the importance of getting this right was another key topic on the Court’s agenda this year. The Outer House was faced with the opposition of a petition of joint administrators who sought to have their remuneration & outlays fixed by the Court [Petition by Joint Administrators of Future Renewables Eco Plc (in Administration), [2023] CSOH27]. The Court considered both pre & post-appointment costs, along with solicitors’ fees, and Lord Braid ultimately handed the matter back over to the Auditor & to the Court Reporter. Later in the year, ICAS issued an updated version of its “Court Reporter Pack” which, amongst other things, sought to clarify the purpose of the issuing of the draft reporter to the officeholder & to reflect the changes of the revised SIP 9 of 2021.
Next, the Court’s powers under paragraphs 88 & 95(b) of Schedule B1 of the Insolvency Act 1986 were tested as the Outer House was asked to grant orders to remove joint administrators where the company’s largest shareholder & significant creditor called for further investigations to be carried out. The circumstances were quite exceptional and included an admitted mis-declaration of VAT, and financial improprieties, along with significant debts owed [Administration of Goals Soccer Centres PLC, [2023] CSOH 79]. The Outer House granted the orders just last month.
Another hot topic on this year’s agenda among lawyers, businesses & insolvency practitioners alike, has been the Moveable Transactions (Scotland) Act 2023 which seeks to modernise the law on taking security over “moveable” property, in Scotland, with the introduction of two new registers (The Register of Assignations & The Register of Statutory Pledges). Once the Act comes into force, it will be interesting to see what changes it brings to lending trends and how this will affect Scottish companies’ ability and readiness to raise secured finance.
Finally, the Bankruptcy and Diligence (Scotland) Bill has reached Stage 1 of its legislative journey. The Bill seeks to tweak the current bankruptcy regime, in part, and to modernise certain debt recovery regimes. In addition, the Bill seeks to a “mental health moratorium” designed to give breathing space to debtors suffering from mental health problems. One to watch in terms of how this will be implemented & whether our regime will somewhat mimic the framework already in place south of the border.
It will be interesting to see what 2024 brings & hopefully there will be many more interesting cases & legislative changes to consider.
