Scottish Insolvency
If your company is registered in Scotland, make sure the insolvency advice you follow is actually written for a Scottish company.
The overall principles of company insolvency are familiar across the UK, but Scotland has important differences in its liquidation procedures, courts, public notices and creditor enforcement system.
That matters when you are dealing with real decisions rather than simply reading about insolvency.
For example:
- A Scottish CVL has a creditors’ decision procedure and timetable
- Scottish insolvency notices use the Edinburgh Gazette
- The Accountant in Bankruptcy has a role in Scottish corporate insolvency
- Compulsory liquidation is dealt with through Scottish courts
- Scotland uses sheriff officers, diligence and arrestment
- The Scottish compulsory-liquidation process does not use the Official Receiver in the same way as England and Wales
You do not need to learn the Scottish insolvency system yourself. You just need advice based on the system that actually applies to your company.
Start with what you need to know
My company is insolvent.
What happens now?
Understand the main Scottish insolvency options and how to recognise when financial difficulty has become a formal insolvency problem.
I’ve read something online.
Does it apply in Scotland?
See the important differences between Scottish company insolvency and the procedures commonly described for England and Wales.
What is AiB?
Understand why the Accountant in Bankruptcy appears in a Scottish company liquidation and what directors actually need to do.
Why is the company in the Edinburgh Gazette?
Find out what Gazette notices mean, who can see them and the difference between a normal CVL notice and a winding-up petition.
Scottish company liquidation
For most insolvent Scottish companies that need to close, liquidation is likely to mean either:
- A Creditors’ Voluntary Liquidation started voluntarily by the company; or
- A court winding up, which can arise from a creditor petition or a petition by the company or its directors
The end result is insolvent liquidation, but the cost, timetable and route into the process can be quite different.
How do creditors decide in a Scottish CVL?
Scottish law sets the procedure and timetable for the creditors’ decision.
Following the shareholders’ winding-up resolution, the directors seek creditors’ decision on the nomination of a liquidator by deemed consent or a decision procedure conducted virtually.
The decision date must be at least three business days after notice is delivered and no later than 14 days after the resolution. The statement of affairs must reach creditors by the business day before the decision date.
A Scottish company must follow the Scottish rules for its notices, decision date and liquidator appointment.
Why does the Accountant in Bankruptcy matter?
The Accountant in Bankruptcy — AiB — is Scotland’s insolvency service.
It has important functions within the devolved areas of Scottish corporate insolvency and maintains Scotland’s Register of Insolvencies.
Directors do not normally need to become involved in completing AiB insolvency filings themselves. That is part of the formal process dealt with by the insolvency practitioner.
Why does the Edinburgh Gazette matter?
Formal Scottish insolvency involves public notices.
For a planned CVL, Gazette publication is a normal part of the process.
If a creditor’s winding-up petition appears in the Gazette, however, the meaning is very different: somebody is asking the Scottish court to liquidate the company.
Knowing which type of notice you are looking at matters much more than simply knowing that the company appears in the Gazette.
Which Scottish court deals with company liquidation?
Compulsory liquidation is dealt with through the Scottish courts.
Depending on the circumstances and jurisdiction, proceedings may be brought in the Court of Session or an appropriate Sheriff Court.
If you have received winding-up papers, do not worry about learning the Scottish court structure.
What matters is:
- Whether you need to respond
- Which court is named
- Who presented the petition
- What deadline applies
Scottish creditor enforcement is different too
A company facing formal debt recovery in Scotland may encounter language such as:
- Sheriff officers
- Diligence
- Charge for payment
- Arrestment
- Attachment
These are Scottish enforcement procedures.
If an article tells you what “bailiffs” can do to your Scottish company without mentioning the Scottish system, check whether it is actually relevant to you.
Looking for a quick answer?
Our Scottish Insolvency FAQs are built around the questions directors usually want answered first:
What if creditor enforcement has already started?.
- How much does liquidation cost?
- How quickly can it be done?
- CVL or Director’s Petition?
- What happens to HMRC debt?
- What happens to me personally?
Need Scottish insolvency advice rather than another definition?
You do not need to understand the legislation before speaking to us.
Tell us what the company owes, what money remains and what creditor action is taking place.
We can explain what options actually apply to your Scottish company and what needs to happen next.