Bankruptcy and Diligence (Scotland) Act 2024

Prospective

Modification of the Bankruptcy (Scotland) Act 2016 S

4 Process for applying for recall of an award of sequestration S

(1) Part 2 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In section 29 (petitions for recall of sequestration), in subsection (4)—

(a) in paragraph (a), after “debtor” insert “(where the debtor is not the petitioner)”,

(b) in paragraph (b), after “any” insert “other”,

(c) in paragraph (c), after “trustee” insert “(where the trustee is not the petitioner)”,

(d) in paragraph (d), after “AiB” insert “(where AiB is not the petitioner)”.

(3) In section 31 (application to Accountant in Bankruptcy for recall of sequestration)—

(a) in subsection (3), in the opening words, before “persons” insert “other”,

(b) in subsection (4)—

(i) in paragraph (a), the words “(where the debtor is not the applicant)” are repealed,

(ii) in paragraph (c), after “trustee” insert “(where AiB is not the trustee)”,

(c) in subsection (5)—

(i) after “granted” insert “—

(a) where AiB is not the trustee,”,

(ii) at the end insert—

“(b) where AiB is the trustee, under section 35(6) (subject to any conditions imposed under section 35(6B)).”.

(4) In section 32 (application under section 31: further procedure)—

(a) for subsection (1) substitute—

“(1) This section applies where—

(a) an application is made under section 31, and

(b) AiB is not the trustee.”,

(b) the heading of the section becomes “Application under section 31: further procedure where Accountant in Bankruptcy is not trustee”.

(5) In section 33 (determination where amount of outlays and remuneration not agreed), in subsection (1)—

(a) the word “and” immediately following paragraph (a) is repealed,

(b) after paragraph (a), insert—

“(aa) AiB is not the trustee, and”.

(6) In section 34 (recall of sequestration by Accountant in Bankruptcy)—

(a) before subsection (1), insert—

“(A1) This section applies where AiB is not the trustee.”,

(b) after subsection (1), insert—

“(1A) Before recalling an award of sequestration AiB must take into account any representations made by an interested person within 21 days beginning with the day on which notice is given under section 31(3)(b).”,

(c) in subsection (2)(a), for “8 weeks” substitute “9 weeks”,

(d) the title to the section becomes “Recall of sequestration where Accountant in Bankruptcy is not trustee”.

(7) In section 35 (recall where Accountant in Bankruptcy trustee)—

(a) in subsection (1)(b)—

(i) before “considers” insert “either—

(i) receives an application under section 31, or

(ii)”,

(ii) for “should” substitute “may”,

(b) in subsection (2), after “must” insert “—

(a) where an application under section 31 is received, notify every creditor known to AiB that the application has been made within 7 days beginning with the day on which the application is received,

(b) where AiB is acting on its own accord,”,

(c) after subsection (2), insert—

“(2A) At the same time as giving notice under subsection (2)(b), AiB must give to the persons mentioned in subsection (2B) a notice informing the recipient that the person has a right to make representations to AiB in relation to the notification within 21 days beginning with the day on which the notice is given.

(2B) The persons are—

(a) the debtor, and

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

(d) in subsection (5)(a), for “subsection (2)” substitute “subsection (2A) or, as the case may be, section 31(3)(b)”,

(e) after subsection (6), insert—

“(6A) AiB may not recall an award of sequestration after—

(a) where no appeal is made under section 37(5)(a), the day which is 9 weeks after the days mentioned in subsection (5)(a) have expired, 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.

(6B) If AiB does not under subsection (6) recall an award of sequestration, the sequestration must continue but is to be subject to such conditions as AiB thinks fit.

(6C) Despite notice being given under subsection (2)(b), the proceedings in the sequestration are to continue as if the notification had not been made until a recall of an award of sequestration is granted under subsection (6) (subject to any conditions imposed under subsection (6B)).”,

(f) the heading of the section becomes “Recall of sequestration where Accountant in Bankruptcy is trustee”.

Commencement Information

I1 S. 4 not in force at Royal Assent, see s. 22(2)

5 Recall of sequestration: payment of interest S

(1) Part 2 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In section 30 (recall of sequestration by sheriff)—

(a) in subsection (2), in paragraph (a), after “full” insert “(including the payment of any interest payable on the debtor’s debts and the payment of the outlays and remuneration of the interim trustee and of the trustee)”, and

(b) in subsection (4), in paragraph (a), after “full of” insert “—

(i) any interest payable on the debtor’s debts (see section 37A), and

(ii)”.

(3) In section 32(4) (application under section 31: further procedure)—

(a) in paragraph (b), for “(including” to the end of that paragraph substitute “, including the payment in full of—

(i) any interest payable on the debtor’s debts (see section 37A),

(ii) the outlays and remuneration of the interim trustee and of the trustee,”, and

(b) in paragraph (c)(ii), after “payment of” insert “any interest payable on the debtor’s debts and payment of”.

(4) In section 34(1) (recall of sequestration by Accountant in Bankruptcy), in paragraph (a), for “(including the outlays and remuneration of the interim trustee and the trustee)” substitute “, including the payment in full of—

(i) any interest payable on the debtor’s debts (see section 37A),

(ii) the outlays and remuneration of the interim trustee and of the trustee,”.

(5) In section 35 (recall where Accountant in Bankruptcy trustee)—

(a) in subsection (1), in paragraph (b), after “including” insert “the payment of any interest payable on the debtor’s debts and the payment of”, and

(b) in subsection (6), in paragraph (a), for “(including” to the end of that paragraph substitute “, including the payment in full of—

(i) any interest payable on the debtor’s debts (see section 37A),

(ii) the outlays and remuneration of the interim trustee and of the trustee,”.

(6) After section 37, insert—

“37A Interest

(1) This section applies for the purpose of determining the amount of interest payable on the debtor’s debts in relation to a recall of an award of sequestration.

(2) Interest, between the date of sequestration and the date of payment of the debt, is payable at the rate specified in section 129(10), unless subsection (3) applies.

(3) This subsection applies if the whole of the debt is paid in full within 6 months after the date of the award of sequestration, in which case interest is not payable on the debt.

(4) For the avoidance of doubt, if only part of the debt is paid within 6 months after the date of the award of sequestration, interest is payable on the whole of the debt (including any part of the debt already paid since the award) in accordance with subsection (2).”.

Commencement Information

I2 S. 5 not in force at Royal Assent, see s. 22(2)

6 When sequestration is awarded: minimal asset process S

(1) Section 22 (when sequestration is awarded) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In subsection (1)(b), for “2(8)” substitute “2(2) or (8)”.

Commencement Information

I3 S. 6 not in force at Royal Assent, see s. 22(2)

7 Petition for sequestration: citation of debtor S

(1) Section 22 (when sequestration is awarded) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) For subsection (4) substitute—

“(4) The debtor must be cited no fewer than 6 days before the date specified under subsection (3).”.

Commencement Information

I4 S. 7 not in force at Royal Assent, see s. 22(2)

8 Gratuitous alienations: right acquired in good faith and for value S

(1) Section 98 (gratuitous alienations) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In subsection (7), for “(6)” substitute “(5)”.

Commencement Information

I5 S. 8 not in force at Royal Assent, see s. 22(2)

9 Time periods for appeals against decisions by AiB S

(1) The Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In section 69 (resignation or death of trustee)—

(a) in subsection (9), for “subsection (11)” substitute “subsections (11) and (12)”,

(b) for subsection (12) substitute—

“(12) T or T's representatives, NT, the debtor or any creditor may, within 14 days beginning with the date of any decision of AiB in an appeal under subsection (11)(a), appeal to the sheriff against that decision.”.

(3) In section 134 (appeal against determination as to outlays and remuneration payable to trustee)—

(a) for subsection (3) substitute—

“(3) The trustee, the debtor or any creditor may, within 14 days beginning with the date of any decision of AiB in an appeal under subsection (1)(a), appeal to the sheriff against that decision.”,

(b) in subsection (4), after “(1)” insert “or (3)”,

(c) after subsection (5), insert—

“(6) The decision of the sheriff on an appeal under subsection (1)(b) or (3) is final.”.

Commencement Information

I6 S. 9 not in force at Royal Assent, see s. 22(2)

10 Protected trust deeds: information and time to be provided to debtor S

(1) Part 14 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In section 167 (statements in and advice regarding trust deed)—

(a) in subsection (3), for paragraph (b) substitute—

“(b) the trustee must provide the debtor with—

(i) a copy of a debt advice and information package, and

(ii) a copy of a trust deed information document,

(ba) the trustee must give the debtor adequate time to consider the advice and material provided under paragraphs (a) and (b),”, and

(b) after subsection (3), insert—

“(4) For the purposes of subsection (3) a “trust deed information document” means a document containing such information (including information regarding the consequences of granting a trust deed), and in such form, as the Scottish Ministers may determine.

(5) The trustee must have regard to any guidance issued by the Scottish Ministers about giving debtors adequate time to consider the advice and material provided under paragraphs (a) and (b) of subsection (3).

(6) The Scottish Ministers must publish any guidance issued under subsection (5).”.

Commencement Information

I7 S. 10 not in force at Royal Assent, see s. 22(2)

11 Debtor not traced: former trustee’s outlays and remuneration S

(1) Section 142 (debtor not traced: new trustee) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In subsection (6)(c), after “133” insert “(there being no effect on any outlays and remuneration paid to the former trustee before the issue of the notice)”.

Commencement Information

I8 S. 11 not in force at Royal Assent, see s. 22(2)

12 Failure of debtor to co-operate with trustee in sequestration S

(1) The Bankruptcy (Scotland) Act 2016 is modified by subsections (2) and (3).

(2) After section 147, insert—

“Failure of debtor to co-operate with trustee S

147A Debtor fails to co-operate: Accountant in Bankruptcy appointment as new trustee

(1) This section applies where—

(a) AiB is not the trustee in the sequestration,

(b) the period of 5 years beginning with the date of sequestration of a debtor’s estate has expired, and

(c) the debtor has not been discharged from that sequestration.

(2) The trustee in the sequestration may apply to AiB for authority to resign office on account of the debtor’s failure to co-operate.

(3) An application under subsection (2) must be made in the prescribed form and include information about—

(a) the nature and the extent of the debtor’s failure to co-operate with the trustee,

(b) the actions taken by the trustee to secure the debtor’s co-operation,

(c) any other matters that the trustee considers relevant, and

(d) details of every creditor known to the trustee.

(4) Before making an application under subsection (2), the trustee must—

(a) notify the debtor by sending an intention to resign notice, and

(b) give an intention to resign notice to every creditor known to the trustee.

(5) An intention to resign notice must—

(a) be in the prescribed form, and

(b) include a statement informing the recipient that the recipient has a right to make representations to AiB in relation to the application within 14 days beginning with the day on which the application is made.

(6) After receiving an application under subsection (2), AiB must—

(a) take into account any representations made by an interested person within 14 days beginning with the day on which the application is made, and

(b) if satisfied of the matters mentioned in subsection (7), issue to the trustee who made the application a notice in the prescribed form granting the application.

(7) The matters are—

(a) that the debtor has failed to co-operate with the trustee to such an extent that the trustee is prevented from carrying out the trustee's functions under this Act,

(b) that the failure is likely to continue, and

(c) that the trustee has taken all reasonable steps to secure the debtor’s co-operation.

(8) AiB—

(a) may request such further information from the trustee as AiB considers necessary to make a decision under subsection (6), and

(b) must notify the trustee, the debtor and every creditor known to AiB of its decision under subsection (6).

(9) Where a notice is issued under subsection (6)(b), 14 days after the notice is given—

(a) AiB is deemed to be the trustee,

(b) AiB must notify the debtor and every creditor known to AiB that AiB is deemed to be the trustee,

(c) AiB must make an appropriate entry in the register of insolvencies,

(d) the former trustee is not entitled to recover, other than by a claim in the final distribution of the debtor’s estate, outlays and remuneration payable under sections 132 and 133 (there being no effect on any outlays and remuneration paid to the former trustee before the issue of the notice),

(e) subsections (9) to (13) of section 69 apply in relation to the appointment of AiB as the new trustee as they apply in relation to the appointment of a new trustee under that section,

(f) section 116 applies as if there were substituted for subsection (2)—

“(2) AiB may at any time before the discharge of the debtor require the debtor to give an account in writing, in such form as may be prescribed, of the debtor’s current state of affairs.”, and

(g) section 138 applies to the sequestration with the modifications in subsection (10).

(10) The modifications are—

(a) in subsection (2), the words “after the date which is 12 months after the date on which sequestration is awarded” are omitted,

(b) in subsection (3), for “must, as soon as practicable after the date which is 12 months after the date on which sequestration is awarded” substitute “may, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee’s functions under this Act”,

(c) in subsection (6), for “must, as soon as practicable after the date which is 12 months after the date of the refusal” substitute “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act”.

147B Accountant in Bankruptcy appointment as new trustee: review and appeal

(1) The trustee may apply to AiB for a review of a decision under section 147A(6) to refuse an application.

(2) The debtor or any creditor may apply to AiB for a review of a decision under section 147A(6) to grant an application.

(3) Any application under subsection (1) or (2) must be made within 14 days beginning with the day of notification of the decision in question.

(4) If an application for review under subsection (2) is made, the grant of the application is suspended until the determination of that review by AiB.

(5) If an application for a review under subsection (1) or (2) is made, AiB must—

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

(b) confirm or revoke the decision within 28 days beginning with the day on which the application is made.

(6) If, under subsection (5)(b), AiB—

(a) revoke a decision to grant an application, AiB must revoke the notice given under section 147A(6)(b) granting the application,

(b) revoke a decision to refuse an application, AiB must issue a notice under section 147A(6)(b) granting the application, or

(c) confirm a decision to grant an application, section 147A(9) applies as if for the words “14 days after the notice is given” there were substituted “14 days after the AiB decision under section 147B(5)(b)”.

(7) The debtor, the trustee or any creditor may appeal to the sheriff against any decision of AiB under subsection (5)(b) within 14 days beginning with the day of the decision.

(8) If an appeal relating to a decision mentioned in subsection (6)(b) or (c) is made, the grant of the application is suspended until the determination of that appeal.

(9) If, on an appeal under subsection (7), the sheriff determines that an application which has been refused should be granted—

(a) the sheriff must order AiB to issue a notice under section 147A(6)(b) granting the application, and

(b) section 147A(9) applies as if the words “14 days after the notice is given” were omitted.

(10) If, on an appeal under subsection (7), the sheriff determines that an application which has been granted should be refused, the sheriff must order AiB to revoke the notice given under section 147A(6)(b) granting the application.

(11) The sheriff clerk must send AiB a copy of the sheriff’s decree.

(12) The decision of the sheriff on an appeal under subsection (7) is final.

147C Debtor fails to co-operate with AiB as trustee

(1) This section applies where—

(a) AiB is the trustee but was not appointed as trustee under section 147A,

(b) the period of 5 years beginning with the date of sequestration a debtor’s estate has expired, and

(c) the debtor has not been discharged from that sequestration.

(2) AiB, if satisfied of the matters mentioned in subsection (3), may make a determination that the debtor has failed to co-operate.

(3) The matters are—

(a) that the debtor has failed to co-operate with AiB as trustee to such an extent that AiB is prevented from carrying out the AiB’s functions as trustee under this Act,

(b) that the failure is likely to continue, and

(c) that AiB has taken all reasonable steps to secure the debtor’s co-operation.

(4) If AiB makes a determination under subsection (2)—

(a) AiB must notify the debtor and every creditor known to AiB that AiB has made a determination under subsection (2), and

(b) section 116 applies as if there were substituted for subsection (2)—

“(2) AiB may at any time before the discharge of the debtor require the debtor to give an account in writing, in such form as may be prescribed, of the debtor’s current state of affairs.”, and

(c) section 138(6) applies as if for the words “must, as soon as practicable after the date which is 12 months after the date of the refusal” there were substituted “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act.”.

(3) In section 214 of the Bankruptcy (Scotland) Act 2016, after paragraph (2)(q) insert—

“(qa) section 147B(5),”.

(4) In calculating a period of 5 years for the purposes of section 147A(1)(b) or section 147C(1)(b) of the Bankruptcy (Scotland) Act 2016, any part of that period which is before the commencement of subsection (1) may be included.

Commencement Information

I9 S. 12 not in force at Royal Assent, see s. 22(2)

13 Commissioners: disqualification from office where AiB is trustee S

(1) Part 4 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

(2) In section 76 (commissioners), in the opening words, after “sequestration” insert “where AiB is not the trustee”.

(3) In section 77 (election, resignation and removal of commissioners), after subsection (6), insert—

“(6A) A commissioner ceases to hold office if AiB is, or becomes, the trustee.”.

Commencement Information

I10 S. 13 not in force at Royal Assent, see s. 22(2)