Bankruptcy (Scotland) Act 1985 (repealed)

Changes over time for: Section 37

Version Superseded: 30/11/2016

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Bankruptcy (Scotland) Act 1985 (repealed), Section 37 is up to date with all changes known to be in force on or before 24 May 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.

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37 Effect of sequestration on diligence.S

(1)The order of the [F1sheriff or, as the case may be, the determination of the debtor application by the Accountant in Bankruptcy] awarding sequestration shall as from the date of sequestration have the effect, in relation to diligence done (whether before or after the date of sequestration) in respect of any part of the debtor’s estate, of—

(a)a decree of adjudication of the heritable estate of the debtor for payment of his debts which has been duly recorded in the register of inhibitions and adjudications on that date; and

(b)an arrestment in execution and decree of furthcoming, an arrestment in execution and warrant of sale, and [F2an attachment],

in favour of the creditors according to their respective entitlements.

(2)[F3Where an] inhibition on the estate of the debtor F4. . . takes effect within the period of 60 days before the date of sequestration F5. . . any relevant right of challenge shall, at the date of sequestration, vest in the F6. . . trustee as shall any right of the inhibitor to receive payment for the discharge of the inhibition:

Provided that this subsection shall neither entitle the trustee to receive any payment made to the inhibitor before the date of sequestration nor affect the validity of anything done before that date in consideration of such payment.

(3)In subsection (2) above, “any relevant right of challenge” means any right to challenge a deed voluntarily granted by the debtor if it is a right which vested in the inhibitor by virtue of the inhibition.

(4)No arrestment [F7, money attachment, interim attachment] or [F8attachment] of the estate of the debtor (including any estate vesting in the F9. . . trustee under section 32(6) of this Act) executed—

(a)within the period of 60 days before the date of sequestration and whether or not subsisting at that date; or

(b)on or after the date of sequestration,

shall be effectual to create a preference for the arrester or [F10attacher] ; and the estate so arrested or [F11attached][F12, or any funds released under section 73J(2) of the Debtors (Scotland) Act 1987 (c. 18) (automatic release of funds)] , or the proceeds of sale thereof, shall be handed over to the F13. . . trustee.

(5)An arrester or [F10attacher] whose arrestment [F14, money attachment, interim attachment] or [F8attachment] is executed within the said period of 60 days shall be entitled to payment, out of the arrested or [F11attached] estate or out of the proceeds of the sale thereof, of the expenses incurred—

(a)in obtaining

[F15(i)warrant for interim attachment; or

(ii)] the extract of the decree or other document on which the arrestment [F16, money attachment] or [F8attachment] proceeded;

(b)in executing the arrestment [F17, money attachment, interim attachment] or [F8attachment] ; and

(c)in taking any further action in respect of the diligence.

[F18(5A)Nothing in subsection (4) or (5) above shall apply to an earnings arrestment, a current maintenance arrestment [F19, a conjoined arrestment order or a deduction from earnings order under the Child Support Act 1991].]

(6)No poinding of the ground in respect of the estate of the debtor (including any estate vesting in the F20. . . trustee under section 32(6) of this Act) executed within the period of 60 days before the date of sequestration or on or after that date shall be effectual in a question with the F20. . . trustee, except for the interest on the debt of a secured creditor, being interest for the current half-yearly term and arrears of interest for one year immediately before the commencement of that term.

(7)The foregoing provisions of this section shall apply to the estate of a deceased debtor which—

(a)has been sequestrated; or

(b)was absolutely insolvent at the date of death and in respect of which a judicial factor has been appointed under section 11A of the M1Judicial Factors (Scotland) Act 1889,

within 12 months after his death, but as if for any reference to the date of sequestration and the debtor there were substituted respectively a reference to the date of the deceased’s death and to the deceased debtor.

(8)It shall be incompetent on or after the date of sequestration for any creditor to raise or insist in an adjudication against the estate of a debtor (including any estate vesting in the permanent trustee under section 32(6) of this Act) or to be confirmed as executor-creditor on the estate.

[F21(8A)A notice of land attachment registered—

(a)on or after the date of sequestration against land forming part of the heritable estate of the debtor (including any estate vesting in the trustee by virtue of section 32(6) of this Act); or

(b)before that date in relation to which, by that date, no land attachment is created,

shall be of no effect.

(8B)Subject to subsections (8C) to (8F) below, it shall not be competent for a creditor to insist in a land attachment—

(a)created over heritable estate of the debtor before the beginning of the period of six months mentioned in subsection (5B) above; and

(b)which subsists on the date of sequestration.

(8C)Where, in execution of a warrant for sale, a contract to sell the land has been concluded—

(a)the trustee shall concur in and ratify the deed implementing that contract; and

(b)the appointed person shall account for and pay to the trustee any balance of the proceeds of sale which would, but for the sequestration, be due to the debtor after disbursing those proceeds in accordance with section 116 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3) (disbursement of proceeds of sale of attached land).

(8D)Subsection (8C) above shall not apply where the deed implementing the contract is not registered before the expiry of the period of 28 days beginning with the day on which—

(a)the certified copy of the order of the sheriff granting warrant is recorded under subsection (1)(a) of section 14 of this Act; or

(b)the certified copy of the determination of the Accountant in Bankruptcy awarding sequestration is recorded under subsection (1A) of that section,

in the register of inhibitions.

(8E)Where a decree of foreclosure has been granted but an extract of it has not registered, the creditor may proceed to complete title to the land by so registering that extract provided that the extract is registered before the expiry of the period mentioned in subsection (8D) above.

(8F)The Scottish Ministers may—

(a)prescribe such other period for the period mentioned in subsection (8D) above; and

(b)prescribe different periods for the purposes of that subsection and subsection (8E) above,

as they think fit.]

(9)Where—

(a)a deceased debtor’s estate is sequestrated; or

(b)a judicial factor is appointed under section 11A of the M2Judicial Factors (Scotland) Act 1889 to administer his estate (in a case where the estate is absolutely insolvent),

within 12 months after the debtor’s death, no confirmation as executor-creditor on that estate at any time after the debtor’s death shall be effectual in a question with the F22. . . trustee or the judicial factor; but the executor-creditor shall be entitled out of that estate, or out of the proceeds of sale thereof, to the expenses incurred by him in obtaining the confirmation.

[F23(10)Expressions used in subsections (5B), (5C) and (8A) to (8F) above which are also used in Chapter 2 of Part 4 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3) have the same meanings in those subsections as they have in that Chapter.]

Textual Amendments

F1Words in s. 37(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 33 (with s. 223); S.S.I. 2008/115, art. 3(1)(i) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))