Explanatory Notes

Bankruptcy and Debt Advice (Scotland) Act 2014

2014 asp 11

29 April 2014

Commentary on Sections

Functions of sheriff and Accountant in Bankruptcy in sequestration

Section 27 – Recall of sequestration by Accountant in Bankruptcy

56.This section inserts 7 new sections after section 17 of the 1985 Act:

57.The new section 17A enables AiB to deal with applications for recall on the ground of payment of debts in full (after the date of sequestration), which are generally straightforward and non-contentious.

58.Section 17B sets out further procedure and requirements for such an application. The basis for a grant of recall by AiB in these circumstances should include payment of the remuneration of, and outlays reasonably incurred by, the interim trustee and/or trustee. Payment of all other costs, including the expenses of the creditor, should also be made before recall can be granted. The new section 17B, therefore, stipulates that the following conditions should be met before an award of recall of sequestration will be granted:

59.Section 17C provides for the determination of outlays and remuneration where AiB receives an application for recall under section 17A, or where the amount of outlays and remuneration in the statement submitted by the trustee under section 17B has not been agreed. AiB must issue a determination fixing the amount of outlays and the remuneration payable to the trustee within 28 days, beginning with the expiry of the 7 day period in section 17B(8) for the submission of extra claims, and may determine the expenses reasonably incurred by a petitioning or concurrent creditor.

60.Section 17D makes provision for AiB to be able to grant recall. This must be on the basis that all the debts have been paid and that all other payments have been made including payment of outlays, remuneration and expenses. The effect of recall granted by AiB is the same as that provided for in section 17(4) and (5) of the 1985 Act. If an application has been made but the trustee has not confirmed that there has been payment of all the sums due within the relevant period (8 weeks after the statement on the debtor’s affairs was submitted, or as extended) the sequestration will continue.

61.Section 17E makes provision for applications to be made to AiB for recall in cases where AiB is the trustee and the grounds for recall are that the debts have been paid in full. AiB has broadly similar functions to other trustees in relation to ascertaining whether or not there are sufficient funds and ensuring that payment is made.

62.Section 17E(2) creates a requirement for AiB to notify the debtor and known creditors that AiB considers recall should be granted.

63.Section 17E(5) requires AiB to make a determination of the fees and outlays which should be calculated in accordance with section 69A of the 1985 Act. That determination must be before granting recall.

64.Section 17E(6)(a) specifies that AiB must be satisfied that the debtor can pay the debtor’s debts in full before granting an award of recall. The other tests are in subsection (6)(b) and (c), requiring debts to be paid in full within 8 weeks and requiring AiB to be satisfied that it is appropriate to grant a recall.

65.Section 17F enables AiB to refer the application to a sheriff for consideration in cases where the AiB considers it appropriate at any time until recall is granted. The sheriff may dispose of such a referral in accordance with section 17 of the 1985 Act as if AiB had petitioned for it under section 16.

66.Section 17G provides that the debtor, a creditor, the trustee or any person with an interest may apply to AiB for a review of the grant of or refusal to grant recall or the determination of the expenses of a creditor petitioning for sequestration. An application for a review must be made within 14 days of the decision being made.

67.Section 17G(5) makes provision to enable determinations made by AiB in relation to recall, including decisions whether to grant or refuse an order for recall, to be appealed to the sheriff, including once AiB has reviewed its decision. Appeals must be made within 14 days of the date of the review decision. The debtor, trustee and any creditor or other person having an interest may appeal.

68.Section 17G(7) purports to give powers to the sheriff to remit a case to AiB. This provision was included in the Bill for the Act at introduction but, as a result of amendments made to the Bill, is no longer required. Pending repeal of the provision, it does not have any substantive effect.

69.The sheriff retains the general power to consider recall in all other cases.