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Executive summary

1.1 This consultation seeks views on the definition of insolvency in the Moveable Transactions (Scotland) Act 2023.

1.2 The paper includes a summary of the amendments made to the insolvency definitions at Stage 2 of the legislative process. These were largely reversed at Stage 3 and the paper focusses on the particular issues raised by these amendments.

1.3 Nevertheless, more general views are also sought on the definitions as well as the more conceptual issue of what insolvency should be intended to capture for the purposes of the legislation in question.

1.4 A list of the questions is set out below and Chapter 5 of the paper provides details on how to respond to the consultation. The closing date for responses is Wednesday 15 November 2023.

Question One – should the relevant definitions of insolvency capture insolvency procedures or the state of being insolvent? Please provide reasons for your views.

Question Two – please provide your views on the current definitions of insolvency in the Act and highlight any circumstances which are unnecessary or alternately are missing. It would be helpful if you could provide reasons and/or examples for your views.

Question Three – should all trust deeds be included in the definition of insolvency for individuals? Please provide reasons for your answer.

Question Four – should the terms composition and arrangement be excluded from the definition of insolvency for individuals? Please provide reasons for your answer.

Question Five – do you agree that the definition of insolvency should include company voluntary arrangements? Please provide reasons for your response.

Question Six – should only company voluntary arrangements which include the claim/encumbered property fall within the definition? Please provide reasons for your response.

Question Seven – do you agree that the definition of insolvency should include the making of an order sanctioning an agreement under Part 26A of the Companies Act 2006? If so, at what point in the process should the definition be aligned to? Please provide reasons for your views.

Question Eight – should only compromises or arrangements which include the claim/encumbered property fall within the definition? Please provide reasons for your views.