The Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017
2017 No. 209
Regulatory Reform
Insolvency
Companies
Bankruptcy
The Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017
Made 15th June 2017
The Scottish Ministers make the following Order in exercise of the powers conferred by section 17(1) and (9) of the Public Services Reform (Scotland) Act 20101and all other powers enabling them to do so.
The Scottish Ministers consider that the conditions in section 18(2) of that Act are satisfied.
The Scottish Ministers have consulted in accordance with section 26 of that Act.
The Scottish Ministers have laid a draft of this Order and an explanatory document before the Scottish Parliament in accordance with section 25(2)(b) of that Act.
In accordance with section 25(2)(c) of that Act, a draft of this Order has been approved by resolution of the Scottish Parliament2.
Citation, commencement and interpretation
1.—(1) This Order may be cited as the Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017.
(2) Subject to paragraph (3), this Order comes into force on 1stAugust 2017.
(3) Articles 2 to 5 come into force—
(a)
(a) on 1st October 2017 insofar as they enable the making of—
(i) rules under section 411 of the 1986 Act; or
(ii) any other subordinate legislation under the 1986 Act; and
(b)
(b) insofar as not already in force, on the day appointed for the coming into force, for all remaining purposes, of section 122 of the Small Business, Enterprise and Employment Act 20153in Scotland.
(4) In this Order—
(a)
(a) “the 1986 Act” means the Insolvency Act 19864; and
(b)
(b) “the 2016 Act” means the Bankruptcy (Scotland) Act 20165.
Amendment of section 70 of the 1986 Act: interpretation for Chapter 2 of Part 3 (receivers in Scotland)
2. In section 70(1) of the 1986 Act—
(a) repeal the definition “prescribed”; and
(b) insert in the appropriate place according to alphabetical order—
““prescribed fee” means the fee prescribed by regulations made under this Chapter by the Secretary of State;”.
Amendment of section 101 of the 1986 Act: liquidation committee (creditors’ voluntary winding up)
3. In section 101 of the 1986 Act6repeal subsection (4).
Amendment of section 142 of the 1986 Act: liquidation committee (winding up by the court)
4. In section 142 of the 1986 Act7—
(a) after subsection (3) insert—
“3A A “liquidation committee” is a committee having such functions as are conferred on it by or under this Act.”; and
(b) repeal subsection (6).
Amendment of section 246A of the 1986 Act: remote attendance at meetings
5. In section 246A of the 1986 Act8—
(a) repeal subsection (2); and
(b) in subsection (10)(a) after “administrator,” insert “receiver (appointed under section 51)”.
New section 173A of the 2016 Act: effect of protected status on essential supplies
6. After section 173 of the 2016 Act insert—
“Effect of protected status on essential supplies
173A.—(1) An insolvency-related term of a contract for the supply of essential goods or services to a debtor ceases to have effect if—
(a)
(a) a trust deed granted by the debtor is granted protected status, and
(b)
(b) the supply is for the purpose of a business which is or has been carried on by or on behalf of the debtor.
(2) An insolvency-related term of a contract does not cease to have effect by virtue of subsection (1) to the extent that—
(a)
(a) it provides for the contract or the supply to terminate, or any other thing to take place, because the individual becomes subject to an insolvency procedure other than a trust deed,
(b)
(b) it entitles a supplier to terminate the contract or the supply, or do any other thing, because the individual becomes subject to an insolvency procedure other than a trust deed, or
(c)
(c) it entitles a supplier to terminate the contract or the supply because of an event that occurs, or may occur, after a trust deed granted by the debtor is granted protected status.
(3) Where an insolvency-related term of a contract ceases to have effect under this section the supplier may—
(a)
(a) terminate the contract, if the condition in subsection (4) is met,
(b)
(b) terminate the supply, if the condition in subsection (7) is met.
(4) The condition in this subsection is that—
(a)
(a) the trustee under the trust deed consents to the termination of the contract,
(b)
(b) on application by the supplier the court grants permission for the termination of the contract, or
(c)
(c) any charges in respect of the supply that are incurred after the date of protection of the trust deed are not paid within the period of 28 days beginning with the day on which payment is due.
(5) An application by the supplier under subsection (4)(b) is to be made to the sheriff who, had a petition for sequestration of the estate been presented at the date the trust deed was granted, would have had jurisdiction to hear that petition in terms of section 15(1) or (3).
(6) The court may grant permission under subsection (4)(b) only if satisfied that the continuation of the contract would cause the supplier hardship.
(7) The condition in this subsection is that—
(a)
(a) the supplier gives written notice to the trustee under the trust deed that the supply will be terminated unless the trustee personally guarantees the payment of any charges in respect of the continuation of the supply after the date of protection of the trust deed, and
(b)
(b) the trustee does not give that guarantee within the period of 14 days beginning with the day the notice is received.
(8) For the purposes of securing that the interests of suppliers are protected, where—
(a)
(a) an insolvency-related term of a contract (the “original term”) ceases to have effect by virtue of subsection (1), and
(b)
(b) a subsequent trust deed granted by the debtor is granted protected status,
the contract is treated for the purposes of subsections (1) to (7) as if, immediately before the subsequent trust deed granted by the debtor is granted protected status, it included an insolvency-related term identical to the original term.
(9) A contract for the supply of essential goods or services is a contract for a supply mentioned in section 222(4).
(10) An insolvency-related term of a contract for the supply of essential goods or services to a debtor is a provision of the contract under which—
(a)
(a) the contract or the supply would terminate, or any other thing would take place, because a trust deed granted by the debtor is granted protected status,
(b)
(b) the supplier would be entitled to terminate the contract or the supply, or to do any other thing, because a trust deed granted by the debtor is granted protected status, or
(c)
(c) the supplier would be entitled to terminate the contract or the supply because of an event that occurred before a trust deed granted by the debtor is granted protected status.
(11) Subsection (1) does not have effect in relation to a contract entered into before 1st August 2017.”.
Amendment of section 222 of the 2016 Act: supplies by utilities
7.—(1) Section 222 of the 2016 Act is amended as follows.
(2) In subsection (4)—
(a)
(a) after paragraph (a) insert—
“(aa)
“(aa) a supply of gas by a person within paragraph 1 of schedule 2A of the Gas Act 1986 (supply by landlords etc.),”;
(b)
(b) after paragraph (b) insert—
“(ba)
“(ba) a supply of electricity by a class of person within Class A (small suppliers) or Class B (resale) of schedule 4 of the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 ( S.I. 2001/3270),”;
(c)
(c) after paragraph (c), repeal “and”, and insert—
“(ca)
“(ca) a supply of water by a water services provider within the meaning of the Water Services etc. (Scotland) Act 20059,
(cb)
(cb) a supply of water by a person who has an interest in the premises to which the supply is given,”;
(d)
(d) after paragraph (d) insert—
“(e)
“(e) a supply of communications services by a person who carries on a business which includes giving such supplies, and
(f)
(f) a supply of goods or services mentioned in subsection (5A) by a person who carries on a business which includes giving such supplies, where the...
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