Office of Public Sector Information
PART 1 continued
(1) Section 32 of the 1985 Act (vesting of estate and dealings of debtor after sequestration) is amended as follows.
(2) In subsection (1), for “subsection (2)” substitute “subsections (2) and (4B)”.
(3) After subsection (2), insert—
“(2WA) Subject to subsection (4L) below, no application may be made under subsection (2) above after the date on which the debtor’s discharge becomes effective.
(2XA) An order made by the sheriff under subsection (2) above shall specify the period during which it has effect and that period—
(a) may end after the date on which the debtor’s discharge becomes effective; and
(b) shall end no later than 3 years after the date on which the order is made.
(2YA) An order made by the sheriff under subsection (2) above may provide that a third person is to pay to the trustee a specified proportion of money due to the debtor by way of income.
(2ZA) If the debtor fails to comply with an order made under subsection (2) above, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale or to imprisonment for a term not exceeding 3 months or to both.”.
(4) After subsection (4), insert—
“(4A) The sheriff clerk shall send a copy of any order made under subsection (2) above (and a copy of any variation or recall of such an order) to the Accountant in Bankruptcy.
(4B) Where no order has been made under subsection (2) above, a debtor may enter into an agreement in writing with the trustee which provides—
(a) that the debtor is to pay to the trustee an amount equal to a specified part or proportion of his income; or
(b) that a third person is to pay to the trustee a specified proportion of money due to the debtor by way of income.
(4C) No agreement under subsection (4B) above may be entered into after the date on which the debtor’s discharge becomes effective.
(4D) Subsection (2XA) above applies to agreements entered into under subsection (4B) above as it applies to orders made under subsection (2) above.
(4E) An agreement entered into under subsection (4B) above may, if subsection (4K) below has been complied with, be enforced, subject to subsection (4F) below, as if it were an order made under subsection (2) above.
(4F) Subsection (2ZA) above does not apply to an agreement entered into under subsection (4B) above.
(4G) An agreement entered into under subsection (4B) above may be varied—
(a) by written agreement between the parties; or
(b) by the sheriff, on an application made by the trustee, the debtor or any other interested person.
(4H) The sheriff—
(a) may not vary an agreement entered into under subsection (4B) above so as to include provision of a kind which could not be included in an order made under subsection (2) above; and
(b) shall grant an application to vary such an agreement if and to the extent that the sheriff thinks variation is necessary to determine a suitable amount to allow for the purposes specified in paragraphs (a) and (b) of subsection (2) above, being an amount which shall not be included in the amount to be paid to the trustee.
(4J) Where a third person pays a sum of money to the trustee under subsection (2YA) or (4B)(b) above, that person shall be discharged of any liability to the debtor to the extent of the sum of money so paid.
(4K) The trustee shall (unless he is the Accountant in Bankruptcy) send a copy of any agreement entered into under subsection (4B) above (and a copy of any variation of such an agreement) to the Accountant in Bankruptcy.
(4L) If the debtor fails to comply with an agreement entered into under subsection (4B) above, the sheriff, on the application of the trustee, may make an order under subsection (2) above—
(a) ending on the date on which the agreement would, had the debtor continued to comply with it, have ended; and
(b) on the same terms as the agreement.”.
(5) In section 1A of that Act (supervisory functions of the Accountant in Bankruptcy), after subsection (1)(b)(iia) (as inserted by section 2(2) of this Act), insert—
“(iib) orders made under subsection (2) of section 32 of this Act and agreements made under subsection (4B) of that section;”.
(1) After section 32(9) of the 1985 Act (circumstances where dealings with debtor not challengeable by permanent trustee), insert—
“(9A) Where the trustee has abandoned to the debtor any heritable property, notice in such form as may be prescribed given to the debtor by the trustee shall be sufficient evidence that the property is vested in the debtor.
(9B) Where the trustee gives notice under subsection (9A) above, he shall, as soon as reasonably practicable after giving the notice, record a certified copy of it in the register of inhibitions.”.
(2) After section 39 of that Act, insert—
(1) This section applies where a debtor’s sequestrated estate includes any right or interest in the debtor’s family home.
(2) At the end of the period of 3 years beginning with the date of sequestration the right or interest mentioned in subsection (1) above shall—
(a) cease to form part of the debtor’s sequestrated estate; and
(b) be reinvested in the debtor (without disposition, conveyance, assignation or other transfer).
(3) Subsection (2) above shall not apply if, during the period mentioned in that subsection—
(a) the trustee disposes of or otherwise realises the right or interest mentioned in subsection (1) above;
(b) the trustee concludes missives for sale of the right or interest;
(c) the trustee sends a memorandum to the keeper of the register of inhibitions under section 14(4) of this Act;
(d) the trustee registers in the Land Register of Scotland or, as the case may be, records in the Register of Sasines a notice of title in relation to the right or interest mentioned in subsection (1) above;
(e) the trustee commences proceedings—
(i) to obtain the authority of the sheriff under section 40(1)(b) of this Act to sell or dispose of the right or interest;
(ii) in an action for division and sale of the family home; or
(iii) in an action for the purpose of obtaining vacant possession of the family home;
(f) the trustee and the debtor enter into an agreement such as is mentioned in subsection (5) below.
(4) The Scottish Ministers may, by regulations, modify paragraphs (a) to (f) of subsection (3) above so as to—
(a) add or remove a matter; or
(b) vary any such matter,
referred to in that subsection.
(5) The agreement referred to in subsection (3)(f) above is an agreement that the debtor shall incur a specified liability to his estate (with or without interest from the date of the agreement) in consideration of which the right or interest mentioned in subsection (1) above shall—
(a) cease to form part of the debtor’s sequestrated estate; and
(b) be reinvested in the debtor (without disposition, conveyance, assignation or other transfer).
(6) If the debtor does not inform the trustee or the Accountant in Bankruptcy of his right or interest in the family home before the end of the period of 3 months beginning with the date of sequestration, the period of 3 years mentioned in subsection (2) above—
(a) shall not begin with the date of sequestration; but
(b) shall begin with the date on which the trustee or the Accountant in Bankruptcy becomes aware of the debtor’s right or interest.
(7) The sheriff may, on the application of the trustee, substitute for the period of 3 years mentioned in subsection (2) above a longer period—
(a) in prescribed circumstances; and
(b) in such other circumstances as the sheriff thinks appropriate.
(8) The Scottish Ministers may, by regulations—
(a) make provision for this section to have effect with the substitution, in such circumstances as the regulations may prescribe, of a shorter period for the period of 3 years mentioned in subsection (2) above;
(b) prescribe circumstances in which this section does not apply;
(c) prescribe circumstances in which a sheriff may disapply this section;
(d) make provision requiring the trustee to give notice that this section applies or does not apply;
(e) make provision about compensation;
(f) make such provision as they consider necessary or expedient in consequence of regulations made under paragraphs (a) to (e) above.
(9) In this section, “family home” has the same meaning as in section 40 of this Act.”.
(1) For paragraphs 5 to 13 of Schedule 5 to the 1985 Act (protected trust deeds) substitute—
“5 (1) The Scottish Ministers may by regulations make provision as to—
(a) the conditions which require to be fulfilled in order for a trust deed to be granted the status of a protected trust deed;
(b) the consequences of a trust deed being granted that status;
(c) the rights of any creditor who does not accede to a trust deed which is granted protected status;
(d) the extent to which a debtor may be discharged, by virtue of a protected trust deed, from his liabilities or from such liabilities or class of liabilities as may be prescribed in the regulations;
(e) the circumstances in which a debtor may bring to an end the operation of a trust deed in respect of which the conditions provided for under sub-paragraph (a) above are not fulfilled;
(f) the administration of the trust under a protected trust deed (including provision about the remuneration payable to the trustee).
(2) Regulations under this paragraph may—
(a) make provision enabling applications to be made to the court;
(b) contain such amendments of this Act as appear to the Scottish Ministers to be necessary in consequence of any other provision of the regulations.”.
(2) In section 73(1) of that Act (interpretation), for the definition of “protected trust deed” substitute—
““protected trust deed” means a trust deed which has been granted protected status in accordance with regulations made under paragraph 5 of Schedule 5 to this Act;”.
(1) Schedule 4 to the 1985 Act (discharge on composition) is amended as follows.
(2) In paragraph 1(1), for “clerk issues the act and warrant to the permanent” substitute “ or, as the case may be, the Accountant in Bankruptcy appoints the”.
(3) In paragraph 4, for sub-paragraphs (c) and (d) substitute—
“(c) not later than 1 week after the date of publication of such notice, send to every creditor known to him—
(i) a copy of the terms of offer; and
(ii) such other information as may be prescribed.”.
(4) For paragraphs 5 to 8, substitute—
“5 The notice mentioned in paragraph 4(b) of this Schedule shall be in the prescribed form and shall contain such information as may be prescribed.
6 Where, within the period of 5 weeks beginning with the date of publication of the notice under paragraph 4(b) of this Schedule, the trustee has not received notification in writing from a majority in number or not less than one third in value of the creditors that they reject the offer of composition, the offer of composition shall be approved by the trustee.
7 Where the trustee has received notification within the period and to the extent mentioned in paragraph 6 of this Schedule, the offer of composition shall be rejected by the trustee.
8 Any creditor who has been sent a copy of the terms of the offer as referred to in paragraph 4(c)(i) of this Schedule and who has not notified the trustee as mentioned in paragraph 6 of this Schedule that he objects to the offer shall be treated for all purposes as if he had accepted the offer.
8A (1) The Scottish Ministers may by regulations amend paragraphs 4 to 8 of this Schedule by replacing them, varying them or adding to or deleting anything from them.
(2) Regulations made under sub-paragraph (1) above may contain such amendments of this Act as appear to the Scottish Ministers to be necessary in consequence of any amendment made by the regulations to the said paragraphs 4 to 8.
8B (1) Where an offer of composition is approved, a creditor who has not been sent a copy of the terms of the offer as mentioned in paragraph 4(c)(i) of this Schedule or who has notified the trustee of his rejection of the offer as mentioned in paragraph 6 of this Schedule may, not more than 28 days after the expiry of the period mentioned in said paragraph 6, appeal to the Accountant in Bankruptcy against such approval.
(2) In determining an appeal under sub-paragraph (1) above, the Accountant in Bankruptcy may—
(a) approve or reject the offer of composition; and
(b) make such other determination in consequence of that approval or rejection as he thinks fit.”.
(5) In paragraph 9(3), for “paragraph 9(2) and (3) of Schedule 2 to” substitute “section 53A of”.
(6) In paragraph 10—
(a) for “lodged with the sheriff clerk” substitute “sent to the Accountant in Bankruptcy”; and
(b) in sub-paragraph (a), for “permanent trustee” substitute “trustee (where he is not the Accountant in Bankruptcy)”.
(7) For paragraph 11, substitute—
“11 (1) Where the documents have been sent to the Accountant in Bankruptcy under paragraph 10 of this Schedule and either—
(a) the period mentioned in paragraph 8B(1) of this Schedule has expired; or
(b) the Accountant in Bankruptcy, in determining an appeal under said paragraph 8B(1), has approved the offer of composition,
the Accountant in Bankruptcy shall grant the certificates of discharge referred to in sub-paragraph (2) below.
(2) Those certificates are—
(a) a certificate discharging the debtor; and
(b) a certificate discharging the trustee.
(3) A certificate granted under sub-paragraph (1) above shall be in the prescribed form.
(4) The Accountant in Bankruptcy shall—
(a) send a certified copy of the certificate discharging the debtor to the keeper of the register of inhibitions for recording in that register; and
(b) send a copy of that certificate to the trustee who shall insert it in the sederunt book or, where the Accountant in Bankruptcy is the trustee, insert a copy of that certificate in the sederunt book.”.
(8) In paragraph 12, for “An order under paragraph 11” substitute “A certificate granted under paragraph 11(1)”.
(9) In paragraph 14—
(a) the words “the sheriff makes an order approving” are repealed; and
(b) after “composition”, where it first occurs, insert “is approved”.
(10) In paragraph 16—
(a) in sub-paragraph (1), for the words from “an” to “effective” substitute “the granting of a certificate under paragraph 11(1) of this Schedule discharging the debtor”; and
(b) in sub-paragraph (2), for “an order under paragraph 11 above” substitute “the granting of a certificate under paragraph 11(1) of this Schedule”.
(11) In paragraph 17(1)—
(a) the words from “Without” to “decrees,” are repealed; and
(b) for the words from “order” to “and”, where it first occurs, substitute “approval of the offer of composition and the granting of certificates”.
(12) In paragraph 18(1)—
(a) the words from “Without” to “decrees,” are repealed; and
(b) for “an order under paragraph 11” substitute “a certificate granted under paragraph 11(1)”.
(13) In paragraph 4 of Schedule 1 to that Act (determination of amount of creditor’s claim), the words “by the sheriff” are repealed.
In section 1 of the 1985 Act (Accountant in Bankruptcy), after subsection (1), insert—
“(1A) The Accountant in Bankruptcy shall be an officer of the court.”.
(1) In Schedule 5 to the 1985 Act (voluntary trust deeds for creditors), after paragraph 1, insert—
1A The Accountant in Bankruptcy may, at any time, audit the trustee’s accounts and fix his remuneration.”.
(2) In section 1A(1)(a) of that Act (supervision of persons by the Accountant in Bankruptcy), after sub-paragraph (ii), insert—
“(iia) trustees under protected trust deeds;”.
(1) Section 67 of the 1985 Act (general offences by debtor) is amended as follows.
(2) In subsection (2), after “conceals” insert “, disposes of”.
(3) Subsection (8) is repealed.
(4) In subsection (9), for “to the extent of £100 (or such other sum as may be prescribed) or more” substitute—
“(a) to the extent of £500 (or such other sum as may be prescribed) or more; or
(b) of any amount, where, at the time of obtaining credit, the debtor has debts amounting to £1,000 (or such other sum as may be prescribed) or more,”.
(5) After subsection (9), insert—
“(9A) For the purposes of calculating an amount of—
(a) credit mentioned in subsection (9) above; or
(b) debts mentioned in paragraph (b) of that subsection,
no account shall be taken of any credit obtained or, as the case may be, any liability for charges in respect of—
(i) any of the supplies mentioned in section 70(4) of this Act; and
(ii) any council tax within the meaning of section 99(1) of the Local Government Finance Act 1992 (c. 14).”.
(6) In subsection (10)(a)—
(a) the word “or” after sub-paragraph (i) is repealed;
(b) after sub-paragraph (ii) insert “; or
(iii) a person subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England or Wales,”; and
(c) for “either case” substitute “the case mentioned in sub-paragraph (i) or (ii) above”.
(7) For subsection (10)(c) substitute—
“(c) the relevant information about the status of the debtor is the information that—
(i) his estate has been sequestrated and that he has not been discharged;
(ii) he is an undischarged bankrupt in England and Wales or Northern Ireland; or
(iii) he is subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England or Wales,
as the case may be.”.
(8) After subsection (11) insert—
“(11A) A person shall be guilty of an offence under subsection (1), (2), (4), (5), (6) or (7) above if that person does or, as the case may be, fails to do, in any place in England and Wales or Northern Ireland, anything which would, if done or, as the case may be, not done in Scotland, be an offence under the subsection in question.”.
In section 5 of the 1985 Act (sequestration of the estate of living or deceased debtor)—
(a) in subsection (2B)(a), for “£1,500” substitute “£3,000 or such sum as may be prescribed”; and
(b) in subsection (4), for “£1,500”, in both places where it occurs, substitute “£3,000”.
In section 5 of the 1985 Act, after subsection (2C), insert—
“(2D) No petition may be presented under subsection (2)(b)(i) above unless the qualified creditor has provided, by such time prior to the presentation of the petition as may be prescribed, the debtor with a debt advice and information package.
(2E) In subsection (2D) above, “debt advice and information package” means the debt advice and information package referred to in section 10(5) of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17).”.
(1) Section 12 of the 1985 Act is amended as follows.
(2) In subsection (3), for “subsection (3A)” substitute “subsections (3A) to (3C)”.
(3) After subsection (3A) insert—
“(3B) Where the sheriff is satisfied that the debtor shall, before the expiry of the period of 42 days beginning with the day on which the debtor appears before the sheriff, pay or satisfy—
(a) the debt in respect of which the debtor became apparently insolvent; and
(b) any other debt due by the debtor to the petitioner and any creditor concurring in the petition,
the sheriff may continue the petition for a period of no more than 42 days.
(3C) Where the sheriff is satisfied—
(a) that a debt payment programme (within the meaning of Part 1 of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17)) relating to—
(i) the debt in respect of which the debtor became apparently insolvent; and
(ii) any other debt due by the debtor to the petitioner and any creditor concurring in the petition,
has been applied for and has not yet been approved or rejected; or
(b) that such a debt payment programme will be applied for,
the sheriff may continue the petition for such period as he thinks fit.”.
(1) The following provisions of the 1985 Act are repealed.
(2) In section 21A of that Act (calling of statutory meeting where interim trustee is Accountant in Bankruptcy), in subsection (3)(b)—
(a) sub-paragraph (ii); and
(b) the word “and” immediately preceding that sub-paragraph.
(3) Section 23A of that Act (summary administration) and Schedule 2A to that Act.
(4) In section 24 of that Act (election of permanent trustee), subsections (3B), (4A) and (5).
(5) In section 25 of that Act (confirmation of permanent trustee), subsection (2A).
In section 31 of the 1985 Act (vesting of estate at date of sequestration), after subsection (5), insert—
“(5A) Any non-vested contingent interest vested in the trustee by virtue of subsection (5) above shall, where it remains so vested in the trustee on the date on which the debtor’s discharge becomes effective, be reinvested in the debtor as if an assignation of that interest had been executed by the trustee and intimation thereof made at that date.”.
After section 43 of the 1985 Act, insert—
(1) This section applies to a debtor who—
(a) has not been discharged under this Act; or
(b) is subject to—
(i) an order made by the sheriff under subsection (2) of section 32 of this Act; or
(ii) an agreement entered into under subsection (4B) of that section.
(2) The trustee shall, at the end of—
(a) the period of 6 months beginning with the date of sequestration; and
(b) each subsequent period of 6 months,
require the debtor to give an account in writing, in such form as may be prescribed, of his current state of affairs.”.
(1) In section 49 of the 1985 Act (adjudication of claims)—
(a) in subsection (6), after “debtor” insert “(subject to subsection (6A) below)”; and
(b) after subsection (6), insert—
“(6A) A debtor may appeal under subsection (6) above if, and only if, he satisfies the sheriff that he has, or is likely to have, a pecuniary interest in the outcome of the appeal.”.
(2) In section 53 of that Act (procedure after end of accounting period)—
(a) in subsection (6), after “debtor” insert “(subject to subsection (6A) below)”; and
(b) after subsection (6), insert—
“(6A) A debtor may appeal under subsection (6) above if, and only if, he satisfies the Accountant in Bankruptcy or, as the case may be, the sheriff that he has, or is likely to have, a pecuniary interest in the outcome of the appeal.”.
After section 59C(2) of the 1985 Act (content of court order converting protected trust deed into sequestration), insert—
“(2A) The provisions of this Act shall apply to an order made by the sheriff under subsection (1) above as if it was a determination by the Accountant in Bankruptcy of a debtor application under section 12(1) of this Act and in relation to which the member State liquidator was a concurring creditor.”.
In section 32(1) of the Sheriff Courts (Scotland) Act 1971 (c. 58) (power of Court of Session to regulate civil procedure in sheriff court), after paragraph (l) insert—
“(m) permitting a debtor appearing before a sheriff under section 12 of the Bankruptcy (Scotland) Act 1985 (c. 66) (award of sequestration) to be represented, in such circumstances as may be specified in the act of sederunt, by a person who is neither an advocate nor a solicitor.”.
Bankruptcy and Diligence etc (Scotland) Act 2007