Delegated Powers and Law Reform Committee

Meeting date: Tuesday, February 7, 2017

Official Report 321KB pdf

Draft Instruments subject to Approval

Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017 [Draft]

Under agenda item 6, we will consider the draft Public Services Reform (Corporate Insolvency and Bankruptcy) (Scotland) Order 2017, which is document SG/2017/8, and the proposed explanatory document, which is SG/2017/9. The draft order has been initially laid under a super-affirmative procedure, which means that it is required to go through pre-legislative scrutiny that involves a formal consultation period of 60 days before the Parliament will be asked to agree to it.

The draft order seeks to amend the Insolvency Act 1986, the Bankruptcy (Scotland) Act 2016 and the Public Services Reform (Insolvency) (Scotland) Order 2016 (SSI 2016/141). Its purposes are to modernise certain aspects of Scottish corporate insolvency law to bring them into line with the position in England and Wales; to promote the on-going operation and rescue of viable businesses that are subject to personal insolvency proceedings; and to apply certain aspects of the 2016 order to the winding-up of a company that was under way when that order came into force, as opposed to those aspects applying only to a new winding-up.

The explanatory document that was laid with the draft order sets out the background to it, the policy objectives and the effect of the various provisions. Four points that arose from the draft order were raised with the Scottish Government. As a result, the Scottish Government has undertaken to update some aspects of the explanatory document.

Does the committee therefore agree not to draw the instrument to the Parliament’s attention but to welcome the Scottish Government’s agreement to update the proposed explanatory document in the following respects: to explain in further detail why the Scottish ministers consider that article 6 of the draft order does not prevent any person from continuing to exercise any right or freedom that that person might reasonably expect to continue to exercise, in accordance with sections 18(2)(e) and 27(1)(d)(i) of the Public Services Reform (Scotland) Act 2010; and to explain why articles 6 to 8 of the draft order reduce a burden within the meaning of section 17(2)(c) of the 2010 act—that is, an obstacle to best regulatory practice—in accordance with section 27(1)(d)(ii) of that act?

Members indicated agreement.

Does the committee also agree to encourage the Scottish Government to update the explanation that the explanatory document provides in relation to articles 3 and 4 of the draft order so that it refers specifically to paragraph 10 of schedule 8 to the Insolvency Act 1986, as that would assist readers of the explanatory document to understand more fully the basis on which the powers and duties of liquidation committees are defined in rules that are made under section 411 of that act?

Members indicated agreement.