Small and state-funded: An empirical study of liquidations in Scotland

Abstract

There is significant scope for empirical research in the field of corporate insolvency law. This paper seeks to make a valuable contribution to this field of research. It features analysis of data regarding all insolvent liquidations in Scotland that had their end point within a period of a year, specifically 1 October 2019-30 September 2020 (even if the liquidations commenced prior to that period). A dataset was compiled using information from final accounts documentation for liquidations available from the UK's companies register. Following the introduction, the paper provides background and context for corporate insolvency in Scotland, with particular reference to liquidation and the rules relating to creditors. The section also includes comparisons with the law of England and Wales. The paper then moves on to discuss the empirical methodology adopted and how the relevant data was obtained. This is followed by results and analysis focused on: the asset values of companies in the study, the lifespan of those companies, the timespan of their liquidations, the levels of liquidation expenses, the recoveries of creditors (including secured, preferential and ordinary unsecured creditors), and the role of HMRC in liquidations, as a petitioner and in terms of paying liquidation expenses. The paper contains a number of significant findings regarding each of these matters. It supports the case for a streamlined liquidation procedure for smaller companies and for the introduction of an official receiver in Scotland (while also justifying the existence of the official receiver in England and Wales). Lastly, after the identification of some limitations regarding the analysed data, the paper highlights potential lines of further research building upon this study, including expanding the time periods examined, comparing the data for Scotland with data for other jurisdictions, most obviously England and Wales, and the consideration of corresponding data for other insolvency procedures.