Commentary on Sections
Discharge following sequestration
Section 17 – Discharge of debtor
34.This section replaces section 54 of the 1985 Act (‘Automatic discharge of the debtor’) with 3 new sections to replace the existing process whereby a trustee is required to apply to the sheriff to defer an automatic discharge, with a new process whereby the trustee (for cases where AiB is not the trustee) must prepare and send a report to AiB without delay after 10 months from when sequestration was awarded. The report will include information on the debtor’s assets, liabilities, financial and business affairs. It will also contain information on the conduct of the debtor and whether they have cooperated with their trustee, and complied with the statement of undertaking. Section 64 of the 1985 Act sets out the debtor’s responsibilities in cooperating generally in sequestration—failure to take every practicable step necessary to enable the trustee to perform the trustee’s functions under the Act can result in the debtor having to appear before the sheriff to explain non-compliance, which can result in a fine or imprisonment.
35.The trustee must also send a copy of the report to the debtor and all known creditors to allow them to make representations within 28 days to AiB. Decisions by AiB to grant or refuse to grant discharge will be able to be reviewed by AiB and then appealed by the trustee or any creditor to the sheriff (see section 54B). A decision to discharge the debtor will not take effect until a 14 day period has elapsed beginning with the day of notification of the decision.
36.For cases where AiB is the trustee, the new section 54A (‘Discharge where Accountant in Bankruptcy the trustee’) provides that AiB should, instead of applying, intimate a report to the debtor and any creditor, together with a proposal for whether discharge is to be granted. The trustee, the debtor or the creditor will be able to apply to review the decision within 14 days, as above, and to make representations to AiB within 21 day thereafter, after which AiB must award or refuse discharge. That award or refusal is to be appealable to the sheriff as with a decision on an application. A discharge will not take effect until the 14 day period has elapsed. Further provision is made in section 54B for reviews and appeals under these sections.
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