10.The 2016 Act” contains provisions allowing the Accountant in Bankruptcy (“the AiB”) to recall an award of sequestration on the grounds that the debtor has paid, or is about to pay, their debts in full. Sequestration is the term used for bankruptcy in Scotland. It is the formal legal process in Scotland in which a person is declared bankrupt or insolvent by the AiB or a court. As set out in section 38(1) of the 2016 Act, the effect of the recall of an award of sequestration is, so far as practicable, to restore the debtor and any other person affected by the sequestration to the position the debtor, or, as the case may be, the other person, would have been in if the sequestration had not been awarded. The sequestration process is administered by a trustee, which may be a private trustee or the AiB. The process for applying for a recall of an award of sequestration differs depending on who initiates the process and whether or not the trustee is the AiB. Essentially there are three possible scenarios: 1) where the AiB is not the trustee, 2) where the AiB is the trustee and another party makes the application, or 3) where the AiB is the trustee and acts on its own accord. The amendments made by this section seek to clarify the process for each of these scenarios.
See the glossary in the Policy Memorandum for definition of terms.
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