There are significant differences in the procedures available to lenders north and south of the border when it comes to enforcing fixed charges or standard securities over real/heritable property. In this blog, we will compare the process in England & Wales ("E&W") of appointing a fixed charge or "LPA" receiver with the Scottish calling-up procedure
England & Wales: LPA receivers
The recent English High Court decision of Re Glam and Tan Ltd [2022] EWHC 855 (Ch) highlights the ways in which a director can be found liable, as well as the reasons why they may be relieved of responsibility for breaches of section 212 of the Insolvency Act 1986, which penalises delinquent directors and officers.
The legislation
Following the Coronavirus pandemic, the Scottish Government introduced two key Acts. The Coronavirus (Scotland) Act 2020 and the Coronavirus (Scotland) (No.2) Act 2020 - together, these Acts made two significant changes to personal insolvency in Scotland.
The 2020 Coronavirus (Scotland) Acts
Our recent updates have explained the rise in instances of fraud and the civil litigation options open to victims of fraudulent conduct.
The results of KPMG's Fraud Barometer showed a significant increase in fraud cases in 2021, confirming the general upward trend in this area. My colleagues recently prepared an update on the case of Hewlett Packard v Lynch, described as one of the most expensive and high profile fraud trials in recent history.
Often, clients contact us about debts due to them, with the expectation that a lengthy and expensive court action will have to take place before they have a chance of recovering those funds. However, in the right circumstances, there may be another option available.
Summary diligence is a peculiarity of the Scottish legal system. The term "summary diligence" is used to refer to enforcement of certain legal rights based on a document (for example, a lease) rather than a court decree. It can be a useful tool for creditors to avoid the courtroom.
It has taken over 20 months, but we now have a reported decision from the High Court in England on the operation of the new moratorium provisions introduced by the Corporate Insolvency and Governance Act 2020. Sir Alastair Norris, sitting as a High Court judge, has rejected a creditor's attempt to bring a moratorium to an end following a monitors' decision not to terminate the moratorium.
The changes to the director disqualification regime brought by the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 (the "Act") come into effect on 15 February 2022. We discuss the extension of disqualification proceedings and the impact on directors here.
The Changes
On 26 January 2022, the Covid recovery and Reform Bill (the "Bill") was introduced to the Scottish Parliament. The Bill followed a consultation exercise by the Scottish Government on the proposed changes to Scottish bankruptcy (known as sequestration). These proposed changes generated a good deal of interest with almost 3,000 responses being received from individuals and representative organisations.
In the context of debt recovery litigation, the obtaining of a decree (judgment) should not be an end in itself and this is particularly true in relation to volume debt recovery litigation. The purpose of a court decree is to enable the creditor obtain payment from his debtor of the sums of principal, interest and expenses (legal costs) due in terms of the decree.