England, Wales & Scotland: The key differences in practice

15 September 2025

By Sam Jacks, Manager at Kroll, and Tim Cooper, Partner at Addleshaw Goddard.  

One of the joys of insolvency law and practice in the UK is that practitioners in one part of the UK are able to operate across all parts of the UK, at least from a licensing perspective. However, despite statutory corporate insolvency law being predominantly Westminster driven, practice differs significantly between the ‘Home Nations', and no more acutely so than that between England & Wales on the one part and Scotland on the other.

For corporate insolvency, for a start, there is a separate body of rules for each jurisdiction. Whilst these are in large part similar and at least since 2018 (in Scotland) structured in a similar manner, there are notable differences which can be completely alien for a practitioner from England to those in Scotland and vice versa. There is then the fact that the general law of Scotland is entirely different law to that of England & Wales, particularly in terms of property and security.

Let's not even start on personal insolvency!

These differences, particularly in a group setting in which there are Scottish and English companies and entities, makes for challenging practical differences in trying to achieve a consistent group approach, or even just an intra-UK aligned strategy. There could be a whole book written on comparable law and practice between Scotland and England, just for corporate insolvency. However, we shall try to focus on a few of the headline questions and concisely highlight some of the key considerations for the unwary practitioner stepping across Hadrian's Wall.

Q.) What are the key considerations for an Insolvency Practitioner where a landlord is owed unpaid rent by a tenant that has entered administration/ liquidation?

A.) A major difference in Scotland is that landlords have a form of security over the sale proceeds of ‘corporeal movable' property (aka 'chattels', 'stock', etc) owned by a tenant, located at a leased premises, in respect of unpaid rent - "Landlord's Hypothec". To put it another way, the goods and stock of a tenant are hypothecated to the Landlord for the discharge of unpaid rent.

This security interest gives landlords an effective super-priority status, including over floating charge security. Until April 2025, when the Moveable Transactions (Scotland) Act 2023 (MTSA) came into force, Scotland had no equivalent of a "chattel mortgage" to create fixed charge security over moveables. That could only be achieved through a possessory pledge of the goods, which is impracticable as a form of secured lending.

Therefore, landlords in Scotland have enjoyed an unassailable, automatic, unregistered form of common law super priority security right for rent arrears. This right is not available to landlords in England where pre-insolvency rent arrears rank as an unsecured claim in insolvency proceedings (see e.g. Goldacre). Landlords in England, to get ahead of the ranking game, would have to conduct Commercial Rent Arrears Recovery (or "CRAR") proceedings (in old money, ‘distraint for rent' and take "walking possession" of tenant goods). Such proceedings can be halted by the various forms of insolvency moratorium, whereas for the Scottish Hypothec, it is a passive security, so there is no "proceeding" or "action" to which the moratorium applies - it just exists!

It is important to note that the Hypothec claim relates to unpaid rent only and does not extend to statutory interest, dilapidations or other lease related claims and does not cover assets owned by third parties for example, assets on hire purchase or those subject to retention of titles claims.

Clearly, any IP (whether Scottish or English) faced with a potential Landlord's Hypotech, should seek legal advice as early as possible, ideally before appointment and throughout the course of the insolvency. The range of practical touchpoints are extensive, and include the following suggestions:

• Strategy: Scottish landlords are effectively, or potentially, a secured creditor. The landlord's position will be key to determining the strategy for the case and the overall outcome to each class of creditor, and also for plotting a procedural route through the insolvency itself.
• Know your creditors: English CVA's for example in a retail setting, treat landlord's as unsecured creditors, whereas this does not work for Scottish landlord creditors, even if the debtor company is English. The same applies to English companies in administration or liquidation with premises in Scotland, so the fact you have a Scottish landlord should trigger procedural alarm bells for procedures requiring secured creditor engagement and classification. So, the landlord needs to be recorded as a secured creditor, and treated as such
• Estimate the Hypothec exposure: quickly establish what the lease defines as ‘rent' and the amount of unpaid rent owed by the tenant at the ‘Appointment Date'. It may be a condition of the lease that a tenant is required to pay additional rent above the base rent i.e., as a percentage of turnover if specific conditions are met, which could form part of the Hypothec claim if unpaid;
• Identify the hypothecated assets: "Corporeal Movable" property is essentially any physical thing not permanently affixed to or part of the fabric of the building - stock, equipment, tools, etc. literally things that can be moved from one place to another without effectively changing the nature of the asset itself. Also, review the lease to see if the tenant's moveable property is specifically defined within its terms. At a practical level, a detailed inventory should be taken of the ‘moveables' at the leased premises immediately on appointment and professional agents should be engaged to value them. The IP is under a common law duty to account to the landlord for hypothecated goods of the tenant, up to the amount of the arrears, so without the inventory and valuation, the IP will be in difficulty fulfilling this duty.
• Engage the landlord: It is advisable that IPs should not take steps to remove or deal with the hypothecated goods, without firstly entering dialogue with the landlord, to protect against the risk of any challenges to their actions, which could give rise to personal liability. A landlord may wish to attend site to undertake their own inventory/ valuation and the landlord's prior written consent should be sought before selling the movable assets. Where the value of the unpaid rent exceeds the expected realisable value of the assets in question, an IP may consider handing over those assets to the landlord to deal with directly.
• Record it in writing: where commercial terms are agreed with a landlord it may be appropriate to put a formal settlement agreement in place confirming the position so there can be no rebuttal of the terms reached. At the very least, there needs to be an email exchange confirming what is agreed, if the value in question does not warrant the cost of a formal agreement.

Lastly, on this question, although not directly relevant to the Scottish Landlord Hypothec, if the lease is of little or no realizable value, and the Hypothec claim exceeds the value of the hypothecated goods, the IP will want to ‘walk away' from the lease. Of course, a liquidator of an English company has the ability to disclaim an onerous lease pursuant to Section 178 of the Insolvency Act 1986. Not so for a liquidator of a Scottish company. Instead, the liquidator will need to renounce any interest and no payments of rent or other occupancy charges should be paid to the landlord. The landlord can formally irritate the lease and take repossession; however, Court direction may be required to formally end the lease.

Q.) What are the key procedural differences between Winding-Up Petitions in Scotland and England.

A.) The Winding-Up of a Company in both Scotland and England is governed by the Insolvency Act 1986. However, the process of liquidation is devolved to Scottish Parliament, and so it is the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 (Scottish Liquidation Rules) which govern the process of the compulsory liquidation of a Scottish registered company.

Additionally, the Scottish Liquidation Rules, unlike their English counterpart, do not lay out any rules on Scottish court procedure on the petition itself. Scottish court procedure is governed by "Acts of Sederunt", not civil procedure rules, and there is no specialist "Insolvency and Companies Court" list in Scotland.

Here are a few notable procedural and substantive differences:

• Firstly, it is not a form of "class action", brought by one petitioning creditor for the benefit of all. Therefore, creditors don't piggy-back off an existing petition and can issue their own, meaning a debtor company can face more than one petition at the same time.
• Because it is not a "class action" going to an open hearing for any creditor to attend, the petition is not listed for a hearing at the outset, allowing time for advertising etc. Instead, it is given "first orders" by the Court for "intimation" of the petition and a period in which interested parties are to lodge "answers", usually 8 days from intimation. If no answers are lodged, the petitioner can file a motion for final orders for the winding up of the company. Therefore, a Scottish company has significantly less time to oppose a Winding-Up Petition than their English counterparts.
• In Scotland, "intimation" means several things, and the 8 day period for answers applies from the last act of intimation:
  • the Petition will be intimated on the walls of the Court, quite literally by pinning it on the public board in Court for all to see;
  • advertising in the Edinburgh Gazette and national press;
  • service on the Company
• By contrast, in England a company has a seven-day window before the Petition can be advertised once it has been served on a company, providing a longer period to defend the Petition. A court hearing will also be set to hear the Petition regardless of whether the Petition has been opposed.
• This means that the Petition comes to the attention of banks and other stakeholders much sooner, which could result in bank accounts being frozen, negatively impacting on the day-to-day operations of a business and not to mention the reputational damage that follows. It may be possible to seek the petitioner's agreement to hold off intimating the petition to preserve the business in order to market the business for sale, However the Petition will still be visible on the walls of the court and thus it may be advisable to consider early dialogue with all key stakeholders, including the secured creditors, to understand their willingness to support the proposed insolvency strategy for the company.
• As there is no equivalent of the Official Receiver in Scotland for corporate insolvency (the Accountant in Bankruptcy only keeps a register of corporate insolvencies), a petitioner may include a nomination of an IP to be appointed interim liquidator on winding up, pending a decision procedure in the compulsory liquidation to fortify their appointment.

Therefore, the procedure in Scotland is likely to halt the Company's trading activities far more abruptly. This along with the time constraints will limit the insolvency options available and the ability to preserve the value in the business where a sale might be possible.

Scotland, however, has one innovative trick up its sleeve that England lacks: caveats! The company can instruct lawyers to lodge caveats in the Court of Session and the Sheriff Court local to the company's registered office. If there is a process filed against that company name, caveats will be "triggered" resulting in the lawyers being notified of the trigger and asked if they require a "caveat hearing" before the triggering process is accepted or first orders made. This gives the opportunity for the company to react before the petition process begins, but only a very short period - sometimes, only a day or two is available to decide on whether to insist on a caveat hearing.

Otherwise, once the petition is in process, placing the company into Administration before the end of the 8 days is likely to be the only viable option to trade the business and conduct a sale process to maximise the return for the general body of creditors. This could be achieved by seeking the Qualifying Floating Charge Holder's agreement to intervene in the Petition and effect the appointment of Administrators via paragraph 14 of Schedule B1 of the Insolvency Act 1986 as it would be no longer possible for the directors to make the appointment ‘out of court'. Noting that this will only suspend the Petition for the duration of the Administration, be sure to seek dismissal of the Petition from court before closing the case.

Of course, if there is not QFCH then an application will need to be made to Court to place a company into Administration.

Q.) How does the Moveable Transactions (Scotland) Act 2023 which came into effect on 1 April 2025 impact on the outcome to creditors in a Scottish insolvency?

A.) A fixed charge was previously not permitted over moveable property in Scotland (notwithstanding the landlord's security right under the Hypothec claim) save a possessory pledge, making it difficult to raise finance on assets such as machinery. However, a new form of fixed security now exists in respect of Moveable Property called a ‘Statutory Pledge', pursuant to the Moveable Transactions (Scotland) Act 2023 which came into effect on 1 April 2025.

The Statutory Pledge is registered in the ‘Register of Statutory Pledges' and does away with the previous requirement to physically deliver up assets to perfect security. Whilst the Statutory Pledge is not an all-assets debenture it is akin to a fixed charge and creates greater uniformity between the Scottish and English Rules. The secured creditor still needs to be able to exercise control, for example, through the terms of the security instrument.

Under the new Act, where a debtor company has assigned a claim or right, (for example, an invoice), it can now be registered in the new Register of Assignations to make it effective and similar to a fixed charge security.

An Insolvency Practitioner will now need to incorporate a search of the Register of Statutory Pledges and Register of Assignations into their initial due diligence, alongside their review of any security documentation. This will confirm whether any Statutory Pledges or Assignations exist and to understand the flow of realisations to preferential creditors, floating charge creditors and ordinary creditors which will now be impacted by the new prior ranking fixed security. Noting that the Registers of Scotland are responsible for maintaining both Registers and are therefore separate to Companies House which details security information under the English rules.

An Insolvency Practitioner will also need to seek consent from the secured creditor or Court to sell assets once classed as floating charge assets and therefore saleable without prior consent. Given the wider class of assets now covered by fixed security, Insolvency Practitioners will need to consider whether there will be sufficient floating charge funds available to meet the general cost of the insolvency process in Scotland, prior to accepting an appointment.