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Time periods under the Scottish Insolvency Rules 2018

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david-menzies By David Menzies

14 February 2019

Main points:

  • The Insolvency Scotland Rules 2018 will apply, with some exceptions, to existing and new cases from 6 April 2019

  • Insolvency practitioners need to be aware of statutory interpretation of time periods to ensure compliance with legislative timescales

  • Delivery time may need to be factored in, which will vary depending on communication methods used

This article forms part of a series looking at the significant changes to insolvency procedures being brought in in Scotland from 6 April 2019. In this article, David Menzies looks at the changes relating to time periods and delivery requirements.

While it may seem obvious what days and months are, in the land of insolvency legislation what seems obvious may be far from it. The Insolvency (Scotland) (Company Voluntary Arrangement and Administration) Rules 2018 (ISCVAAR 2018) and The Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 (ISRWUR 2018) (together the Insolvency Scotland Rules 2018) detail how time periods in the Insolvency Scotland Rules 2018 are to be calculated.

Helpfully, both sets of Rules deal with the calculation of time periods in Chapter 3 of Part 1 of the relevant Rules – in particular r1.3 and r1.4 in each of the respective sets of rules.

Comparison with England and Wales

Unlike the Insolvency (England and Wales) Rules 2016, the definition of the time period are set out specifically within the Insolvency Scotland Rules 2018 and do not cross-refer to the Civil Procedures Rules 1998.

Days

'Days' are to be calculated in accordance with r 1.3. Days actually means ‘clear days’ (r1.3(2)). This excludes the day the period starts and, if the period end is defined by an event, then the day of that event.

Example 1

Where a liquidator is appointed by a court, then by ISRWUR 2018 r 5.21(4)(b) the interim liquidator must deliver notice of the order of appointment to creditors or otherwise advertise the appointment if permitted by the court within 28 days. If the liquidator was appointed on 1 May 2019 then the latest date for the advert to appear would be 30 May 2019.

Example 2 (where period end is an event)

A person required to provide a statement of affairs by an administrator may request to be released from that requirement or to be provided with an extension of time. Where the administrator refuses such a request the person may apply to the court and where a hearing is to take place, ISRCVAAR 2018, r 3.33(4) requires that the applicant must, at least 14 days before any hearing, deliver to the administrator a notice stating the venue with a copy of the application and of any evidence on which the applicant intends to rely.

If the court hearing was fixed for 17 May 2019 then the latest that the notice may be delivered to the administrator would be 1 May 2019.

Business day

The Insolvency Scotland Rules 2018 do not define 'Business day' as this is defined in s 251 of the Insolvency Act 1986 (IA 1986). A ‘business day’ is, therefore, any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in any part of Great Britain. In calculating the periods then the application of r 1.3(2) will still mean that ‘clear days’ should be used when calculating the relevant time period.

Example 3

ISCVAAR 2018, r 3.31(7) requires a Statement of Concurrence to be received by the administrator within five business days from the date which they received the Statement of Affairs. If the Statement of Affairs was received on Thursday 2 May 2019, with Monday 6 May 2019 being a bank holiday, the relevant person would have to deliver the Statement of Concurrence no later than Friday 10 May 2019.

Months

'Months' are defined in r1.4 of the Insolvency Scotland Rules 2018. The calculation of the period will depend upon whether there is a start and/or end of the period referred to. Where the start of a period is specified then the end of the relevant period will end on the day before the same date in the relevant number of months referred to, or if there is not such a date then the date shall be the last day of the month.

If the end of the period is specified then the relevant period will begin on the day after the same date in the relevant number of months referred to, or if there is not such a date then the date shall be the last day of the month.

Example 4

ISCVAAR 2018, r 2.40 requires a company voluntary arrangement (CVA) Supervisor’s Report and accounts to be prepared for a period of 12 months commencing on the date the CVA was approved and delivered within a period of two months of the end of the 12 month period. Where the CVA was approved on 6 June 2019 then the first Report is prepared to 5 June 2020 and must be delivered no later than 6 August 2020.

Example 5

Under the same rule, if the CVA was approved on 31 July 2019, the Report is prepared to 30 July 2020 and must be delivered no later than 30 September 2020.

Example 6

Under ISCVAAR 2018, r 3.23(1)(f), the Notice of Intention to Appoint an administrator must state that the company has not been in administration, been subject to a CVA or being subject to a moratorium within the previous 12 months. If the Notice of Intention to Appoint is signed on 30 April 2019, then the relevant period would begin on 1 May 2018.

Weeks

Although there are numerous periods which are referenced in weeks, the Insolvency Scotland Rules 2018 do not define how they are to be calculated. We, therefore, suggest that the same approach is taken to weeks as is taken to months. Where the start of a period is specified then the end of the relevant period will end on the same day in the relevant number of weeks referred to. If the end of the period is specified, then the relevant period will begin on the same day in the relevant number of weeks referred to.

Example 7

Under ISRWUR 2018, r 7.19 requires claims to be adjudicated on and accepted or rejected not later than 4 weeks before the end of an accounting period. If the date of the accounting period end is Wednesday 31 July 2019 the date claims must be accepted or rejected by the liquidator is no later than Wednesday 3 July 2019.

Factor in delivery times

The Insolvency Scotland Rules 2018 generally will require documents to be ‘delivered’ within a timescale. There does however remain a few occasions where a requirement is to ‘send’.

It is important to remember that the Insolvency Scotland Rules 2018 contain provisions on when delivery is deemed to have occurred. Given that documents may be sent to recipients by a variety of methods (postal, personal service, email, website) then each delivery method has its own provisions. For example, first-class post and second-class post is deemed to have been delivered two and four business days after posting (ISRWUR 2018, r 1.38 and ISCVAAR 2018, r1.38), while electronic communication is deemed to have been delivered at 9:00am the business day following sending (ISRWUR 2018, r 1.41 and ISCVAAR 2018, r1.41).

Deemed delivery timescales should, therefore, be factored into requirements. This is somewhat difficult given the variety of communication methods that could be in operation. Best advice is probably therefore always to factor into diaries the maximum delivery time under any method of communication that may be used.

Example 8

ISRWUR 2018, r 4.15 requires a liquidator to deliver to the creditors and contributories within a period of 28 days of his appointment a notice accompanied by certain information. Where the liquidator was appointed on 7 May 2019 then the notice must be delivered no later than 5 June 2019. The notice would have to be posted no later than 30 May 2019 to allow four business days deemed delivery timescale using second-class post.

CVL commencement under the Scottish Insolvency Rules 2018

By David Menzies, Director of Practice

14 February 2019

Decision making under the Scottish Insolvency Rules 2018

By David Menzies, Director of Practice

14 February 2019

2022-11-mitigo 2022-11-mitigo
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