Bankruptcy and Debt Advice (Scotland) Act 2014

27 Recall of sequestration by Accountant in Bankruptcy

After section 17 of the 1985 Act, insert—

“17A Application to Accountant in Bankruptcy for recall of sequestration

(1) An application for recall of an award of sequestration may be made to the Accountant in Bankruptcy on the ground that the debtor has paid or is able to pay the debtor’s debts in full.

(2) An application may be made by—

(a) the debtor,

(b) any creditor (whether or not a person who was a petitioner for, or concurred in a debtor application for, the sequestration),

(c) the trustee (where the Accountant in Bankruptcy is not the trustee), or

(d) any other person having an interest (whether or not a person who was a petitioner for the sequestration).

(3) The person making an application must, at the same time as applying to the Accountant in Bankruptcy, give to the persons mentioned in subsection (4)—

(a) a copy of the application, and

(b) a notice informing the recipient that the person has a right to make representations to the Accountant in Bankruptcy in relation to the application before the expiry of the period of 21 days beginning with the day on which the notice is given.

(4) The persons are—

(a) the debtor,

(b) any person who was a petitioner for, or concurred in a debtor application for, the sequestration,

(c) the trustee.

(5) Despite an application being made, the proceedings in the sequestration are to continue as if the application had not been made until a recall of an award of sequestration is granted under section 17D(1) (subject to any conditions imposed under section 17D(5)).

(6) Where the applicant withdraws the application or dies, the Accountant in Bankruptcy may continue the application by substituting any person mentioned in subsection (2) for the applicant.

17B Application under section 17A: further procedure

(1) This section applies where an application is made under section 17A.

(2) The trustee must prepare a statement on the debtor’s affairs, so far as within the knowledge of the trustee.

(3) The trustee must submit the statement to the Accountant in Bankruptcy—

(a) at the same time as the trustee makes the application under section 17A, or

(b) where the application is made by another person, before the expiry of the period of 21 days beginning with the day on which the notice is given under section 17A(3)(b).

(4) The statement must—

(a) indicate whether the debtor has agreed to—

(i) the interim trustee’s claim for outlays reasonably incurred and for remuneration for work reasonably undertaken by the interim trustee (including any outlays and remuneration which are yet to be incurred), and

(ii) the trustee’s claim for outlays reasonably incurred and for remuneration for work reasonably undertaken by the trustee (including any outlays and remuneration which are yet to be incurred),

(b) state whether or not the debtor’s debts have been paid in full (including the payment of the outlays and remuneration of the interim trustee and the trustee),

(c) where the debtor’s debts have not been so paid—

(i) provide details of any debt which has not been paid, and

(ii) indicate whether, in the opinion of the trustee, the debtor’s assets are likely to be sufficient to pay the debts in full (including the payment of the outlays and remuneration of the interim trustee and the trustee) before the day which is 8 weeks after the day on which the statement is submitted, and

(d) provide details of any distribution of the debtor’s estate.

(5) The trustee must notify every creditor known to the trustee that an application has been made—

(a) where the application is made by the trustee, before the expiry of the period of 7 days beginning with the day on which the application is made,

(b) where the application is made by another person, before the expiry of the period of 7 days beginning with the day on which the notice is given under section 17A(3)(b).

(6) If a creditor has not previously submitted a claim under section 22 or 48, the creditor must, in order to be included in the statement made by the trustee, submit a claim.

(7) A claim must be submitted—

(a) in accordance with section 22(2) and (3), and

(b) before the expiry of the period of 14 days beginning with the day on which notice is given under subsection (5).

(8) If any creditor submits a claim in accordance with subsection (7), the trustee must update and resubmit the statement before the expiry of the period of 7 days beginning with the expiry of the period mentioned in subsection (7)(b).

(9) The trustee must update and resubmit the statement if—

(a) the statement previously submitted did not state in accordance with subsection (4)(b) that the debtor’s debts have been paid in full, and

(b) before the day on which the application is determined by the Accountant in Bankruptcy, the trustee is able to make that statement.

17C Determination of outlays and remuneration

(1) This section applies where—

(a) the Accountant in Bankruptcy receives an application under section 17A, and

(b) the statement submitted by the trustee under section 17B indicates that the amount of the outlays and remuneration of the trustee is not agreed.

(2) The trustee must provide to the Accountant in Bankruptcy—

(a) at the same time as submitting the statement under section 17B—

(i) the trustee’s accounts of the trustee’s intromissions with the debtor's estate for audit, and

(ii) details of the trustee’s claim for outlays reasonably incurred and for remuneration for work reasonably undertaken by the trustee (including any outlays and remuneration which are yet to be incurred), and

(b) such other information in relation to that claim as may be reasonably requested by the Accountant in Bankruptcy.

(3) The Accountant in Bankruptcy must before the expiry of the period of 28 days beginning with the expiry of the period mentioned in section 17B(8) issue a determination fixing the amount of the outlays and the remuneration payable to the trustee.

(4) The Accountant in Bankruptcy may before the expiry of the period mentioned in subsection (3) determine the expenses reasonably incurred by a creditor who was a petitioner or, as the case may be, concurred in a debtor application for sequestration.

(5) Subsections (4) and (5) of section 53 apply to the Accountant in Bankruptcy for the purpose of making a determination in accordance with subsection (3) as they apply to the commissioners or the Accountant in Bankruptcy for the purpose of fixing an amount under that section.

17D Recall of sequestration by Accountant in Bankruptcy

(1) The Accountant in Bankruptcy may grant a recall of an award of sequestration if—

(a) the trustee has notified the Accountant in Bankruptcy in the statement submitted under section 17B that the debtor’s debts have been paid in full (including the payment of the outlays and remuneration of the interim trustee and the trustee), and

(b) the Accountant in Bankruptcy is satisfied that in all the circumstances of the case, it is appropriate to do so.

(2) The Accountant in Bankruptcy may not grant a recall of an award of sequestration after—

(a) where no appeal is made under section 17G(5)(a), the day which is 8 weeks after the day on which the statement was first submitted under section 17B(3), or

(b) where such an appeal is made, such later day which is 14 days after the day on which the appeal is finally determined or abandoned.

(3) The effect of the recall of an award of sequestration is, so far as practicable, to restore the debtor and any other person affected by the sequestration to the position the debtor or, as the case may be, the other person would have been in if the sequestration had not been awarded.

(4) A recall of an award of sequestration is not to—

(a) affect the interruption of prescription caused by—

(i) the presentation of the petition for sequestration,

(ii) the making of the debtor application, or

(iii) the submission of a claim under section 22 or 48,

(b) invalidate any transaction entered into before such recall by the interim trustee, or by the trustee, with a person acting in good faith, or

(c) affect a bankruptcy restrictions order which has not been annulled under section 56J(1)(a).

(5) If the Accountant in Bankruptcy does not grant a recall of an award of sequestration under subsection (1) the sequestration is to continue but is to be subject to such conditions as the Accountant in Bankruptcy thinks fit.

(6) Without delay after granting a recall of an award of sequestration under subsection (1), the Accountant in Bankruptcy must send a certified copy of the decision to the Keeper of the Register of Inhibitions for recording in that register.

17E Recall where Accountant in Bankruptcy the trustee

(1) This section applies where the Accountant in Bankruptcy—

(a) is the trustee, and

(b) considers that recall of an award of sequestration should be granted on the ground that the debtor has paid or is able to pay the debtor’s debts in full (including the payment of the outlays and remuneration of the interim trustee and the trustee).

(2) The Accountant in Bankruptcy must notify the debtor and every creditor known to the Accountant in Bankruptcy that the Accountant in Bankruptcy considers that subsection (1) applies.

(3) If a creditor has not previously submitted a claim under section 22 or 48, the creditor must, in order for the creditor’s claim to a dividend out of the debtor’s estate to be considered, submit a claim.

(4) A claim must be submitted—

(a) in accordance with section 22(2) and (3), and

(b) before the expiry of the period of 14 days beginning with the day on which notice is given under subsection (2).

(5) Before granting a recall of an award of sequestration the Accountant in Bankruptcy must—

(a) take into account any representations made by an interested person before the expiry of the period of 21 days beginning with the day on which the notice is given under subsection (2), and

(b) make a determination of the Accountant in Bankruptcy’s fees and outlays calculated in accordance with regulations made under section 69A.

(6) The Accountant in Bankruptcy may grant a recall of an award of sequestration if the Accountant in Bankruptcy is satisfied that—

(a) the debtor has paid the debtor’s debts in full (including the payment of the outlays and remuneration of the interim trustee and the trustee),

(b) those debts were paid in full before the expiry of the period of 8 weeks beginning with the expiry of the period mentioned in subsection (5)(a), and

(c) in all the circumstances of the case, it is appropriate to do so.

(7) Subsections (3) and (4) of section 17D apply in relation to a recall of an award of sequestration granted under subsection (6) as they apply in relation to a recall of an award of sequestration granted under that section.

(8) Without delay after granting a recall of an award of sequestration under subsection (6), the Accountant in Bankruptcy must send a certified copy of the decision to the Keeper of the Register of Inhibitions for recording in that register.

17F Reference to sheriff

(1) The Accountant in Bankruptcy may, at any time before deciding under section 17D(1) whether to grant an application for recall of an award of sequestration, remit to the sheriff an application made under section 17A.

(2) The Accountant in Bankruptcy may, at any time before deciding under section 17E(6) whether to grant a recall of an award of sequestration, remit the case to the sheriff.

(3) If an application is remitted to the sheriff under subsection (1) or (2), the sheriff may dispose of the application or the case in accordance with section 17 as if it were a petition presented by the Accountant in Bankruptcy under section 16.

17G Recall of sequestration by Accountant in Bankruptcy: review and appeal

(1) A person mentioned in subsection (2) may apply to the Accountant in Bankruptcy for a review of—

(a) a decision of the Accountant in Bankruptcy under section 17D(1) or 17E(6) to grant or refuse to grant a recall of an award of sequestration,

(b) a determination of the Accountant in Bankruptcy under section 17C(4).

(2) The persons are—

(a) the debtor,

(b) any creditor,

(c) the trustee,

(d) any other person having an interest.

(3) An application under subsection (1) must be made before the expiry of the period of 14 days beginning with the day on which the decision or, as the case may be, the determination or requirement is made.

(4) If an application under subsection (1) is made, the Accountant in Bankruptcy must—

(a) take into account any representations made by an interested person before the expiry of the period of 21 days beginning with the day on which the application is made, and

(b) confirm, amend or revoke the decision, determination or requirement before the expiry of the period of 28 days beginning with the day on which the application is made.

(5) A person mentioned in subsection (2) may, before the expiry of the period of 14 days beginning with the day on which the decision, determination or requirement is made, appeal to the sheriff against—

(a) a determination of the Accountant in Bankruptcy under section 17C(3) or 17E(5)(b),

(b) a decision of the Accountant in Bankruptcy under subsection (4)(b),

(6) Any decision of the sheriff on an appeal relating to a determination of the Accountant in Bankruptcy under section 17C(3) or 17E(5)(b) is final.

(7) In upholding an appeal relating to a decision under section 17C(1) or the sheriff may quash the decision of the Accountant in Bankruptcy and remit the case, together with reasons for the sheriff’s decision, to the Accountant in Bankruptcy.”.