As readers of our article "The Insolvency Rules join the Electronic Age" will be aware, the UK parliament recently made various changes to the Insolvency (Scotland) Rules with a view to reducing administrative burdens in administration and company voluntary arrangements and allow financial savings to be passed on the creditors.
It should be borne in mind that one of the changes that was introduced be the Enterprise Act 2002 was to allow anything required and permitted to be done at a creditors' meeting in an administration to be carried out by way of correspondence.
Creditors' meetings in Administration: don't meet- write!
This was provided for by paragraph 58 Schedule 1B to the Insolvency Act 1986.
This change was introduced in response to the problems encountered when convening formal meetings. These include unpredictability of attendance and differing opinions of the creditors. Meetings are often seen as a waste of time and incur greater costs meaning less money can be returned to the creditors in the long run. It is thought that this new way of practice will prove useful in cases which do not require extensive debate.
The detailed procedures are set out in rule 2.28 of the Insolvency (Scotland) Rules 1986.
When opting to go down the route of correspondence, the administrator must send a notification of the business being carried out to all who are entitled to notification of a creditors' meeting. The administrator must send a copy of the resolution and a means for creditors to agree or dissent the proposed resolution.
A deadline for the receipt of votes and opinions should also be set. This is at the administrator's discretion, however, it should not be less than 14 days from the date the notice was issued.
Business can continue upon the receipt of at least one response, but if no responses are received, the administrator will be required to resort back to the traditional practice and summon a creditors' meeting.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.