The modernisation of the Scottish Insolvency Rules has been eagerly awaited for some time. In April 2017, England & Wales will see the newly transformed insolvency legislation take full effect with the introduction of the Insolvency (England and Wales) Rules 2016. These new rules do not, however, impact on Scotland.
Scottish insolvency law is undergoing a transformation of its own, with various amendments to the Insolvency Act 1986 and the existing Insolvency (Scotland) Rules 1986 already having been made. The most recent amendments were introduced by the Public Services Reform (Insolvency) (Scotland) Order 2016 (2016 Order) which took effect in April 2016. The purpose of the 2016 Order was to bring the devolved areas of insolvency law more into line with the position to be adopted in England & Wales. However, since the introduction of the 2016 Order, a need for further amendments has been identified as a precursor to the introduction of the proposed new Insolvency Rules in Scotland and to further align insolvency legislation across Scotland, England & Wales. To that end, a further Public Services Reform (Insolvency) (Scotland) Order 2017 (Scottish 2017 Order) is currently under consultation for introduction later in 2017.
One significant amendment introduced by the Insolvency (England and Wales) Rules 2016 is that the new rules will apply (generally speaking) to all insolvency processes irrespective of whether they commenced before or after introduction of the rules. The benefits of such an approach are recognised in Scotland. Accordingly, the Scottish 2017 Order, will, pending introduction of the new Insolvency Scotland Rules, seek to amend certain existing saving provisions in Scottish insolvency law in order to align the Scottish position with the general application being adopted under the new rules in England and Wales. The Scottish 2017 Order will also make other amendments with a view to consolidating certain existing insolvency legislation in Scotland, to further separate bankruptcy legislative provisions from the corporate insolvency processes and to introduce further amendments to bankruptcy legislation regarding essential supplies.
Whilst the amendment of legislation in Scotland has been frequent and has created some frustration for practitioners, the amendment and modernisation of insolvency law in Scotland is necessary and certainly long overdue. Once the Scottish 2017 Order has been introduced and the new Insolvency (Scotland) Rules are finalised and brought into effect (hopefully later in 2017), corporate and personal insolvency law in Scotland should be far clearer, more appropriate and more consistent with the law applicable in England & Wales.