Inhibitions, arrestments, and BAD law
The Bankruptcy and Diligence etc (Scotland) Act 2007 (known to many by its happy acronym "the BAD Act") included substantial reforms to the law of bankruptcy, the law of floating charges, and the law of diligence. The bankruptcy provisions have been in force since April last year; the implementation of the floating charge provisions has been delayed, pending resolution of problems arising from the interaction between the BAD Act and the provisions on registration of company charges in the Companies Act 2006; and the full implementation of the diligence reforms has been subject to some doubt.
It has now been confirmed that the provisions in the BAD Act on arrestments and inhibitions will come into force from 22nd April 2009 – following The Bankruptcy and Diligence etc. (Scotland) Act 2007 (Commencement No. 4, Savings and Transitionals) Order 2009 (SSI 2009/67). Among the reforms: arrestment will be restricted to attachment of the amount due (under s 73E, Debtors (Scotland) Act 1987) rather than the full sum due from arrestee to the common debtor; and to the dismay of examiners in diligence the complex ranking rules relating to inhibitions are removed with inhibitions no longer conferring a preference in ranking (under s 154 of the BAD Act) and now only being breached by the inhibited debtor conveying or granting a right over heritable property (s 160 of the BAD Act).
The implementation of these provisions leaves the regime on land attachments as the only substantial part of the diligence reforms which has not yet come into force. Given that the SNP voted against the BAD Act at Stage 3 due to concerns about the land attachment provisions it can be speculated that while the SNP remain in government these provisions will not be implemented.
The brave new world of diligence in Scotland therefore includes, and is likely to include for some time to come, the law of adjudications. So practitioners are advised not to throw away their copies of Parker, Notes on the Diligence of Adjudication (3rd edn, 1856) just yet.