Bankruptcy (Scotland) Act 1985 (repealed)

[F1 Administration of estate by trustee] S

Textual Amendments

F1 Cross-heading preceding s. 38 substituted (1.4.2008) by virtue of Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 34(3) (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))

38 [F2 Taking possession of estate by trustee] S

(1) The F3 . . . trustee shall—

(a) as soon as may be after his [F4 appointment], for the purpose of recovering the debtor’s estate under section 3(1)(a) of this Act, and subject to section 40 of this Act, take possession of the debtor’s whole estate so far as vesting in the F3 . . . trustee under sections 31 and 32 of this Act and any document in the debtor’s possession or control relating to his assets or his business or financial affairs;

(b) make up and maintain an inventory and valuation of the estate F5 ...; and

(c) forthwith thereafter send a copy of any such inventory and valuation to the Accountant in Bankruptcy.

(2) The F3 . . . trustee shall be entitled to have access to all documents relating to the assets or the business or financial affairs of the debtor sent by or on behalf of the debtor to a third party and in that third party’s hands and to make copies of any such documents.

(3) If any person obstructs a F3 . . . trustee who is exercising, or attempting to exercise, a power conferred by subsection (2) above, the sheriff, on the application of the F3 . . . trustee, may order that person to cease so to obstruct the F3 . . . trustee.

(4) The F3 . . . trustee may require delivery to him of any title deed or other document of the debtor, notwithstanding that a right of lien is claimed over the title deed or document; but this subsection is without prejudice to any preference of the holder of the lien.

Textual Amendments

F2 S. 38 heading substituted (1.4.2008) by virtue of Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 34(2) (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))

F3 Words in s. 38 repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F4 Word in s. 38(1)(a) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 34(1) (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))

F5 Words in s. 38(1)(b) repealed (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 4; S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)

Modifications etc. (not altering text)

C1 Ss. 38, 39(4)(7) applied with modifications by S.I. 1986/1915, Rule 4.22.(1)

39 Management and realisation of estate. S

(1) As soon as may be after his [F6 appointment], the F7 . . . trustee shall consult F8 . . . with the Accountant in Bankruptcy concerning the exercise of his functions under section 3(1)(a) of this Act; and, subject to [F9 subsections (1A), (6) and (9)] below, the F7 . . . trustee shall comply with any general or specific directions given to him, as the case may be—

(a) by the creditors;

(b) on the application under this subsection of the commissioners, by the [F10 sheriff] ; or

(c) F11 . . . by the Accountant in Bankruptcy,

as to the exercise by him of such functions.

[F12 (1A) Subsection (1) above does not apply in any case where the Accountant in Bankruptcy is the trustee.]

(2) The F13 . . . trustee may F13 . . . do any of the following things F13 . . . —

(a) carry on [F14 or close down] any business of the debtor;

(b) bring, defend or continue any legal proceedings relating to the estate of the debtor;

(c) create a security over any part of the estate;

(d) where any right, option or other power forms part of the debtor’s estate, make payments or incur liabilities with a view to obtaining, for the benefit of the creditors, any property which is the subject of the right, option or power.

[F15 (e) borrow money in so far as it is necessary for the trustee to do so to safeguard the debtor's estate;

(f) effect or maintain insurance policies in respect of the business or property of the debtor.]

(3) Any sale of the debtor’s estate by the F16 . . . trustee may be by either public sale or private bargain.

(4) The following rules shall apply to the sale of any part of the debtor’s heritable estate over which a heritable security is held by a creditor or creditors if the rights of the secured creditor or creditors are preferable to those of the F16 . . . trustee—

(a) the F16 . . . trustee may sell that part only with the concurrence of every such creditor unless he obtains a sufficiently high price to discharge every such security;

(b) subject to paragraph (c) below, the following acts shall be precluded—

(i) the taking of steps by a creditor to enforce his security over that part after the F16 . . . trustee has intimated to the creditor that he intends to sell it;

(ii) the commencement by the F16 . . . trustee of the procedure for the sale of that part after a creditor has intimated to the F16 . . . trustee that he intends to commence the procedure for its sale;

(c) where the F16 . . . trustee or a creditor has given intimation under paragraph (b) above, but has unduly delayed in proceeding with the sale, then, if authorised by the [F17 sheriff] in the case of intimation under—

(i) sub-paragraph (i) of that paragraph, any creditor to whom intimation has been given may enforce his security; or

(ii) sub-paragraph (ii) of that paragraph, the F16 . . . trustee may sell that part.

(5) The function of the F16 . . . trustee under section 3(1)(a) of this Act to realise the debtor’s estate shall include the function of selling, with or without recourse against the estate, debts owing to the estate.

(6) The F16 . . . trustee may sell any perishable goods without complying with any directions given to him under subsection (1)(a) or (c) above if the F16 . . . trustee considers that compliance with such directions would adversely affect the sale.

(7) The validity of the title of any purchaser shall not be challengeable on the ground that there has been a failure to comply with a requirement of this section.

(8) It shall be incompetent for the F16 . . . trustee or an associate of his or for any commissioner, to purchase any of the debtor’s estate in pursuance of this section.

[F18 (9) The trustee—

(a) shall comply with the requirements of subsection (4) of this section; and

(b) may do anything permitted by this section,

only in so far as, in his view, it would be of financial benefit to the estate of the debtor and in the interests of the creditors to do so.]

Textual Amendments

F6 Words in s. 39(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(2)(a) (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))

F7 Words in s. 39(1) repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F8 Words in s. 39(1) repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F9 Words in s. 39(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(2)(b) (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))

F10 Word in s. 39(1)(b) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(2)(c) (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))

F11 Words in s. 39(1)(c) repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (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))

F12 S. 39(1A) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(3) (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))

F13 Words in s. 39(2) repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F14 Words in s. 39(2)(a) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(4)(a) (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))

F15 S. 39(2)(e)(f) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(4)(b) (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))

F16 Words in s. 39(3)-(6)(8) repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F17 Word in s. 39(4)(c) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 35(5) (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))

F18 S. 39(9) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 8(2), 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

Modifications etc. (not altering text)

C2 S. 39(3)(4)(7)(8) applied with modifications by Insolvency Act 1986 (c. 45, SIF 66), ss. 185(1)(b), 443

C3 Ss. 38, 39(4)(7) applied with modifications by S.I. 1986/1915, Rule 4.22.(1)

[F19 39A Debtor's home ceasing to form part of sequestrated estate S

(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 [F20 completes title in the Land Register of Scotland or, as the case may be, the Register of Sasines] 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;

[F21 (g) the trustee has commenced an action under section 34 of this Act in respect of any right or interest mentioned in subsection (1) above or the trustee has not known about the facts giving rise to a right of action under section 34 of this Act, provided the trustee commences such an action reasonably soon after the trustee becomes aware of such right.]

(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 F22 ... 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.]

Textual Amendments

F19 S. 39A inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 19(2), 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F20 Words in s. 39A(3)(d) substituted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 21; S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)

F21 S. 39A(3)(g) substituted (1.4.2015) by The Bankruptcy (Money Advice and Deduction from Income etc.) (Scotland) Regulations 2014 (S.S.I. 2014/296), regs. 1(2), 9

F22 Words in s. 39A(6)(b) repealed (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 4; S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)

40 [F23 Power of trustee in relation to the debtor's family home] S

(1) Before the F24 . . . trustee [F25 or the trustee acting under the trust deed] sells or disposes of any right or interest in the debtor’s family home he shall—

(a) obtain the relevant consent; or

(b) where he is unable to do so, obtain the authority of the [F26 sheriff] in accordance with subsection (2) [F27 or, as the case may be, subsection (3)] below.

(2) Where the F24 . . . trustee [F25 or the trustee acting under the trust deed] requires to obtain the authority of the [F28 sheriff] in terms of subsection (1)(b) above, the [F28 sheriff] , after having regard to all the circumstances of the case, including—

(a) the needs and financial resources of the debtor’s spouse or former spouse;

[F29 (aa) the needs and financial resources of the debtor’s civil partner or former civil partner;]

(b) the needs and financial resources of any child of the family;

(c) the interests of the creditors;

(d) the length of the period during which (whether before or after the relevant date) the family home was used as a residence by any of the persons referred to in [F30 paragraphs (a) to (b)] above,

may refuse to grant the application or may postpone the granting of the application for such period (not exceeding [F31 3 years]) as [F32 he] may consider reasonable in the circumstances or may grant the application subject to such conditions as [F32 he] may prescribe.

(3) Subsection (2) above shall apply—

(a) to an action for division and sale of the debtor’s family home; or

(b) to an action for the purpose of obtaining vacant possession of the debtor’s family home,

brought by the F24 . . . trustee [F25 or the trustee acting under the trust deed] as it applies to an application under subsection (1)(b) above and, for the purposes of this subsection, any reference in the said subsection (2) to that granting of the application shall be construed as a reference to the granting of decree in the action.

[F33 (3A) Before commencing proceedings to obtain the authority of the sheriff under [F34 subsection (2) or (3)] the trustee, or the trustee acting under the trust deed, must give notice of the proceedings to the local authority in whose area the home is situated.

(3B) Notice under subsection (3A) must be given in such form and manner as may be prescribed by the Scottish Ministers.]

(4) In this section—

(a) “family home” means any property in which, at the relevant date, the debtor had (whether alone or in common with any other person) a right or interest, being property which was occupied at that date as a residence by the debtor and his spouse [F35 or civil partner] or by the debtor’s spouse [F36 or civil partner] or former spouse [F36 or civil partner](in any case with or without a child of the family) or by the debtor with a child of the family;

(b) “child of the family” includes any child or grandchild of either the debtor or his spouse [F37 or civil partner] or former spouse [F37 or civil partner], and any person who has been brought up or accepted by either the debtor or his spouse [F38 or civil partner] or former spouse [F38 or civil partner] as if he or she were a child of the debtor, spouse [F38 or civil partner] or former spouse [F38 or civil partner] whatever the age of such a child, grandchild or person may be;

[F39 (ba) “local authority” means a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 (c. 39);]

(c) “relevant consent” means in relation to the sale or disposal of any right or interest in a family home—

(i) in a case where the family home is occupied by the debtor’s spouse [F40 or civil partner] or former spouse [F40 or civil partner] , the consent of the spouse [F40 or civil partner] , or, as the case may be, the former spouse [F40 or civil partner] , whether or not the family home is also occupied by the debtor;

(ii) where sub-paragraph (i) above does not apply, in a case where the family home is occupied by the debtor with a child of the family, the consent of the debtor; and

(d) “relevant date” means the day immediately preceding the date of sequestration [F41 or, as the case may be, the day immediately preceding the date the trust deed was granted].

Textual Amendments

F23 S. 40 heading substituted (1.4.2008) by virtue of Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 36(c) (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))

F24 Words in s. 40 repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F25 Words in s. 40(1)(2)(3) inserted (15.11.2010) by Home Owner and Debtor Protection (Scotland) Act 2010 (asp 6), ss. 11(a), 17(3)(4) (with s. 14); S.S.I. 2010/314, art. 6 (subject to transitional provisions and savings in S.S.I. 2010/316, arts 4-7)

F26 Word in s. 40(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 36(a) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10) (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5)

F27 Words in s. 40(1)(b) inserted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), ss. 49(a), 57(2); S.S.I. 2014/261, art. 3 (with arts. 4-7, 11, 12) (as amended by S.S.I. 2015/54, art. 2)

F28 Words in s. 40(2) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 36(b)(i) (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))

F29 S. 40(2)(aa) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(2); S.S.I. 2005/604 {art. 2(c)}

F30 Words in s. 40(2)(d) substituted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(3); S.S.I. 2005/604 {art. 2(c)}

F31 Words in s. 40(2) substituted (15.11.2010) by Home Owner and Debtor Protection (Scotland) Act 2010 (asp 6), ss. 11(b), 17(3)(4) (with s. 14); S.S.I. 2010/314, art. 6 (subject to transitional provisions and savings in S.S.I. 2010/316, arts 4-7)

F32 Words in s. 40(2) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 36(b)(ii) (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); S.S.I. 2008/115, art. 3(1)(a)(i) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F33 S. 40(3A)(3B) inserted (7.9.2010 for specified purposes and 15.11.2010 otherwise) by Home Owner and Debtor Protection (Scotland) Act 2010 (asp 6), ss. 11(c), 17(3)(4) (with s. 14); S.S.I. 2010/314, arts. 5, 6 (subject to transitional provisions and savings in S.S.I. 2010/316, arts 4-7)

F34 Words in s. 40(3A) substituted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), ss. 49(b), 57(2); S.S.I. 2014/261, art. 3 (with arts. 4-7, 11, 12) (as amended by S.S.I. 2015/54, art. 2)

F35 Words in s. 40(4)(a) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(4)(a); S.S.I. 2005/604, art. 2(c)

F36 Words in s. 40(4)(a) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(4)(a); S.S.I. 2005/604, art. 2(c)

F37 Words in s. 40(4)(b) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(4)(b); S.S.I. 2005/604, art. 2(c)

F38 Words in s. 40(4)(b) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(4)(b); S.S.I. 2005/604, art. 2(c)

F39 S. 40(4)(ba) inserted (15.11.2010) by Home Owner and Debtor Protection (Scotland) Act 2010 (asp 6), ss. 11(d)(i), 17(3)(4) (with s. 14); S.S.I. 2010/314, art. 6 (subject to transitional provisions and savings in S.S.I. 2010/316, arts 4-7)

F40 Words in s. 40(4)(c)(i) inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 36(1)(4)(c); S.S.I. 2005/604 {art. 2(c)}

F41 Words in s. 40(4)(d) inserted (15.11.2010) by Home Owner and Debtor Protection (Scotland) Act 2010 (asp 6), ss. 11(d)(ii), 17(3)(4) (with s. 14); S.S.I. 2010/314, art. 6 (subject to transitional provisions and savings in S.S.I. 2010/316, arts 4-7)

41 Protection of rights of spouse against arrangements intended to defeat them. S

(1) If a debtor’s sequestrated estate includes a matrimonial home of which the debtor, immediately before the date [F42 the order is made appointing] the F43 . . . trustee (or, if more than one [F44 trustee is appointed] in the sequestration, of the first [F45 order making such an appointment]) was an entitled spouse and the other spouse is a non-entitled spouse—

(a) the F43 . . . trustee shall, where he—

(i) is aware that the entitled spouse is married to the non-entitled spouse; and

(ii) knows where the non-entitled spouse is residing,

inform the non-entitled spouse, within the period of 14 days beginning with that date, of the fact that sequestration of the entitled spouse’s estate has been awarded, of the right of petition which exists under section 16 of this Act and of the effect of paragraph (b) below; and

(b) the [F46 sheriff] , on the petition under section 16 of this Act of the non-entitled spouse presented either within the period of 40 days beginning with that date or within the period of 10 weeks beginning with the date [F47 of the award] of sequestration may—

(i) under section 17 of this Act recall the sequestration; or

(ii) make such order as [F48 he] thinks appropriate to protect the occupancy rights of the non-entitled spouse;

if [F48 he] is satisfied that the purpose of the petition for sequestration [F49 or, as the case may be, the debtor application] was wholly or mainly to defeat the occupancy rights of the non-entitled spouse.

(2) In subsection (1) above—

• “entitled spouse” and “non-entitled spouse” have the same meanings as in section 6 of the M1 Matrimonial Homes (Family Protection) (Scotland) Act 1981;

• “matrimonial home” has the meaning assigned by section 22 of that Act as amended by the M2 Law Reform (Miscellaneous Provisions) (Scotland) Act 1985; and

• “occupancy rights” has the meaning assigned by section 1(4) of the said Act of 1981.

Textual Amendments

F42 Words in s. 41(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(a) (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))

F43 Words in s. 41 repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F44 Words in s. 41(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(b) (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))

F45 Words in s. 41(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(c) (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))

F46 Words in s. 41(1)(b) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(d)(i) (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))

F47 Words in s. 41(1)(b) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(d)(ii) (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))

F48 Words in s. 41(1)(b) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(d)(iii) (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))

F49 Words in s. 41(1)(b) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 37(d)(iv) (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))

Marginal Citations

M1 1981 c. 59.

M2 1985 c. 73.

[F50 41A Protection of rights of civil partner against arrangements intended to defeat them S

(1) If a debtor’s sequestrated estate includes a family home of which the debtor, immediately before the date [F51 the order is made appointing] the F52 . . . trustee (or, if more than one [F53 trustee is appointed] in the sequestration, of the first [F54 order making such an appointment]) was an entitled partner and the other partner in the civil partnership is a non-entitled partner—

(a) the F52 . . . trustee shall, where he—

(i) is aware that the entitled partner is in civil partnership with the non-entitled partner; and

(ii) knows where the non-entitled partner is residing,

inform the non-entitled partner, within the period of 14 days beginning with that date, of the fact that sequestration of the entitled partner’s estate has been awarded, of the right of petition which exists under section 16 of this Act and of the effect of paragraph (b) below; and

(b) the [F55 sheriff] , on the petition under section 16 of this Act of the non-entitled partner presented either within the period of 40 days beginning with that date or within the period of 10 weeks beginning with the date [F56 of the award] of sequestration may—

(i) under section 17 of this Act recall the sequestration; or

(ii) make such order as [F57 he] thinks appropriate to protect the occupancy rights of the non-entitled partner,

if [F57 he] is satisfied that the purpose of the petition for sequestration [F58 or, as the case may be, the debtor application] was wholly or mainly to defeat the occupancy rights of the non-entitled partner.

(2) In subsection (1) above—

• “entitled partner” and “non-entitled partner” have the same meanings as in section 101 of the Civil Partnership Act 2004;

• “family home” has the meaning assigned by section 135 of the 2004 Act; and

• “occupancy rights” means the rights conferred by subsection (1) of that section 101.]

Textual Amendments

F50 S. 41A inserted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(2), 263, Sch. 28 para. 37; S.S.I. 2005/604 {art. 2(c)}

F51 Words in s. 41A(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(a) (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))

F52 Words in s. 41A repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F53 Words in s. 41A(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(b) (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))

F54 Words in s. 41A(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(c) (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))

F55 Words in s. 41A(b) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(d)(i) (with s. 223)

F56 Words in s. 41A(1)(b) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(d)(ii) (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))

F57 Words in s. 41A(1)(b) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(d)(iii) (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))

F58 Words in s. 41A(1)(b) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 38(d)(iv) (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))

42 [F59 Contractual powers of trustee] S

(1) Subject to subsections (2) and (3) below, the F60 . . . trustee may adopt any contract entered into by the debtor before the date of sequestration where he considers that its adoption would be beneficial to the administration of the debtor’s estate, except where the adoption is precluded by the express or implied terms of the contract, or may refuse to adopt any such contract.

[F61 (2) The trustee must, within 28 days from the receipt by the trustee of a request in writing from any party to a contract entered into by the debtor, adopt or refuse to adopt the contract.

(2A) The period mentioned in subsection (2) may be extended—

(a) in a case where the Accountant in Bankruptcy is the trustee, by the sheriff on the application of the Accountant in Bankruptcy,

(b) in any other case, by the Accountant in Bankruptcy on the application of the trustee.

(2B) The trustee may, before the expiry of the period of 14 days beginning with the day of the decision, apply to the Accountant in Bankruptcy for a review of a decision of the Accountant in Bankruptcy under subsection (2A)(b).

(2C) If an application for a review under subsection (2B) is made, the Accountant in Bankruptcy must—

(a) take into account any representations made by an interested person before the expiry of the period of 21 days beginning with the day on which the application is made, and

(b) confirm, amend or revoke the decision before the expiry of the period of 28 days beginning with the day on which the application is made.

(2D) The trustee may appeal to the sheriff against a decision by the Accountant in Bankruptcy under subsection (2C)(b), before the expiry of the period of 14 days beginning with the day of the decision.

(2E) The Accountant in Bankruptcy may refer a case to the sheriff for a direction before—

(a) making a decision under subsection (2A)(b), or

(b) undertaking any review under this section.

(2F) An application for a review under subsection (2B) may not be made in relation to a matter on which the Accountant in Bankruptcy has applied to the sheriff for a direction under subsection (2E).]

(3) If the F60 . . . trustee does not reply in writing to the request under subsection (2) above within the said period of 28 days or longer period, as the case may be, he shall be deemed to have refused to adopt the contract.

(4) The F60 . . . trustee may enter into any contract where he considers that this would be beneficial for the administration of the debtor’s estate.

Textual Amendments

F59 S. 42 heading substituted (1.4.2008) by virtue of Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 39(b) (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))

F60 Words in s. 42 repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F61 S. 42(2)-(2F) substituted for s. 42(2) (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), ss. 32, 57(2); S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)

Modifications etc. (not altering text)

C4 S. 42 excluded (25.4.1991) by Companies Act 1989 (c. 40, SIF 27), ss. 154, 155, 164(2); S.I. 1991/878, art. 2,Sch.

43 [F62 Money received by trustee] S

(1) Subject to [F63 subsections (1A) and (2)] below, all money received by the F64 . . . trustee in the exercise of his functions shall be deposited by him in the name of the debtor’s estate in an [F65 interest-bearing account in an] appropriate bank or institution.

[F66 (1A) In any case where the Accountant in Bankruptcy is the trustee, subject to subsection (2) below, all money received by the Accountant in Bankruptcy in the exercise of his functions as trustee shall be deposited by him in an interest bearing account in the name of the debtor's estate or in the name of the Scottish Ministers in an appropriate bank or institution.]

(2) The F64 . . . trustee may at any time retain in his hands a sum not exceeding £200 or such other sum as may be prescribed.

Textual Amendments

F62 S. 43 heading substituted (1.4.2008) by virtue of Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 40 (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))

F63 Words in s. 43(1) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 13(a)(i), 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F64 Words in s. 43 repealed (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 226, 227(3), Sch. 6 Pt. 1 (with s. 223); S.S.I. 2008/115, art. 3(2)(3), Sch. 2 (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F65 Words in s. 43(1) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 13(a)(ii), 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F66 S. 43(1A) inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 13(b), 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

[F67 43A Debtor's requirement to give account of state of affairs S

(1) This section applies to a debtor who—

(a) has not been discharged under this Act; or

[F68 (b) is subject to a debtor contribution order.]

(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.]

Textual Amendments

F67 S. 43A inserted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 30, 227(3) (with s. 223); S.S.I. 2008/115, art. 3(1)(a) (with arts. 4-6, 10 (as amended (with effect from 31.1.2011) by S.S.I. 2011/31, art. 5))

F68 S. 43A(1)(b) substituted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 22; S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)

[F69 43B Financial education S

(1) The trustee must notify a living debtor that the debtor is required to undertake a prescribed course of financial education (a “financial education course”) specified by the trustee if, in the opinion of the trustee—

(a) any of the circumstances mentioned in subsection (2) apply, and

(b) undertaking the course would be appropriate for the debtor.

(2) The circumstances are—

(a) in the period of 5 years ending on the date on which the sequestration of the debtor’s estate was awarded—

(i) the debtor’s estate was sequestrated,

(ii) the debtor granted a protected trust deed,

(iii) an analogous remedy (within the meaning of section 10(7)) was in force in respect of the debtor, or

(iv) the debtor participated in a debt management programme under which the debtor made regular payments (including in particular a programme approved in accordance with section 2 of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17)),

(b) the debtor is subject to, or under investigation with a view to an application being made for, a bankruptcy restrictions order,

(c) the trustee considers that the pattern of the debtor’s behaviour, whether before or after the award of sequestration, is such that the debtor would benefit from a financial education course,

(d) the debtor agrees to undertake a financial education course.

(3) The trustee must decide whether to issue a notification under subsection (1)—

(a) before the end of the period of 6 months beginning with the date of award of sequestration, and

(b) in a case where section 54F applies, as soon as reasonably practicable after the trustee ascertains the whereabouts of the debtor or the debtor makes contact with the trustee.

(4) A debtor must not be required to undertake or, as the case may be, complete the financial education course specified by the trustee if, in the opinion of the trustee—

(a) the debtor is unable to participate in the course as a result of the debtor’s health (including by reason of disability or physical or mental illness), or

(b) the debtor has completed a financial education course in the period of 5 years ending on the date on which the sequestration of the debtor’s estate was awarded.

(5) Regulations under subsection (1) may in particular—

(a) prescribe the content, format and method of delivery of a course,

(b) prescribe different courses for different circumstances,

(c) make provision for particular courses to be specified by a trustee where particular circumstances in subsection (2) apply.]

Textual Amendments

F69 S. 43B inserted (30.6.2014 for specified purposes, 1.4.2015 in so far as not already in force) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), ss. 2, 57(2); S.S.I. 2014/172, art. 2, sch.; S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)