Independence & Insolvency: What does the future hold?
I am just back from a few days of meetings in London. Invariably I was asked the same question. Will Scotland be an independent country? As an apolitical Christian (certainly in terms of party politics) lawyer I am probably more objective than some, but of course no one can claim truthful complete objectivity.
However, for what it is worth, I think there will be an impact on doing business in Scotland, whatever the outcome.
In relation to insolvency, this was re-reserved to Westminster a number of years ago. This was because there was general consensus in the profession that having separate regimes North and South of the Border was not working. Scotland retained its own procedures (e.g. remuneration, and treatment of onerous property and contracts is very different for Liquidators and Administrators in Scotland), but the policy path for corporate insolvency (e.g. on complaints handling and governance) was unified. It may be that an independent Scotland does initially simply follow UK Company and Insolvency legislation. However, much will depend on the political negotiations. If there is a delay in entering the EU will Scotland sign up for the UNCITRAL Model Law? Will there be an equivalent to the Cross-Border insolvency regulations? One would have thought that commerce will demand assistance between courts North and South of the Border, but there is still uncertainty. This is immediately going to have an impact for Practitioners so the profession needs certainty quickly from whatever political master is holding sway,
Ironically, one thing that may become more similar North and South of the Border is that it seems to be likely the Scottish Government will propose the Accountant in Bankruptcy taking on functions of a liquidator of last resort like the Official Receiver. This would be new in Scotland and would change the face of the profession- many smaller practitioners rely on work from HMRC who de facto act as the last resort by paying practitioners a minimum fee to take on low or no asset cases. The consequences will have to be fully debated!
In wider Banking and Company law terms much could change in the medium term. Will there need to be new financial regulation law? What rights will shareholders have in Scotland? Will employment law echo England? What will Scottish energy law look like, which is of vital importance to the Oil and Gas sector? Whatever the stated intentions are at this stage I suspect much will come down to the negotiation of political masters; even if a No vote it seems that Scotland will have more power in certain areas and some may impact on Business.
In the litigation world one suspects that the Scottish government will continue with their court reform policy for which the path to reform is already set. There will probably be minimal impact here, providing budgets are not materially changed, given the Scottish court system is already completely different from the rest of the UK.
Amidst the uncertainty, there will be work for lawyers! There will be implications for most businesses and we already see clients, whether in relation to restructuring or otherwise, asking for input in contingency planning. We wait to see what happens on the 18 September!
Eric Baijal is BBM’s Managing Partner and Head of Insolvency and Litigation