DMBM671830 - Scotland - Summary Warrant: Company Administration Order

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The Enterprise modifies Act 2002 company administration orders (CAO’s). It is extremely flexible and convenient to use and administrations will have a wide range of powers.

It is anticipated that any administration will last up to 12 months or 18 months by agreement with the creditors or, exceptionally, longer by application to the court.

The expectancy is that the exit route from administration will be determined within 3 months so that the duration of these administrations will be much shorter than traditional insolvencies.

There are three principal exit routes

  • company voluntary arrangements
  • liquidation

and

  • company dissolution with or without a distribution.

There is concern that because of the inbuilt flexibility administration may be abused where phoenixism is involved or Section 98 creditors meetings are held. Thus as this new procedure becomes established it may well be that administrations will eventually outnumber liquidations.

Also there is scope for creditors (including HMRC) to seek the appointment of anadministrator in place of the traditional company winding up petitions.

Enforcement and Insolvency Services Edinburgh is responsible for the setting up and lodging of claims (the processing side) for company administration cases and also for the technical aspects where HMRC debts are concerned.

Debt management office – preliminary procedures

Once a notice of intention to appoint an administrator is filed at court, it effectively prohibits instituting or continuing any legal process either against a company or against the property of a company.

Where you become aware that such an application has been made it will be necessary to halt any proceedings started but you should not at this stage withdraw the case. If subsequently an administrator is not appointed you should continue the action.

Action to take where administrator appointed

Once you have been informed that an administrator has been appointed you must not apply to the sheriff court for a warrant.

Also any warrant that was obtained prior to the appointment of the administrator must not be sent to the sheriff officer for execution.

You must follow the guidance at INS2.105 and INS2.107 as appropriate.

Attachments at commercial premises

Where articles have been attached on such premises but an auction of these articles has not yet been arranged take no further action and instruct the sheriff officer not to arrange an auction.

Where articles have been attached on commercial premises and an auction has been arranged

  • ask the sheriff officer to submit form 15 to the court to cancel the arrangements for the auction. The sheriff officer should also be asked to explain to the court that cancellation is not as a result of an agreement between the debtor and creditor but to satisfy the relevant requirements of the Enterprise Act 2002
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)((This content has been withheld because of exemptions in the Freedom of Information Act 2000))