(1)A debtor’s apparent insolvency shall be constituted (or, where he is already apparently insolvent, constituted anew) whenever—
(a)his estate is sequestered, or he is adjudged bankrupt in England or Wales or Northern Ireland; or
(b)[F1not being a person whose property is for the time being affected by a restraint order [F2, detained under or by virtue of a relevant detention power] or subject to a confiscation, or charging, order,] he gives written notice to his creditors that he has ceased to pay his debts in the ordinary course of business;
[F3(ba)he becomes subject to main proceedings in a member State other than the United Kingdom;] or
[F4(c)the debtor grants a trust deed,
(ca)following the service on the debtor of a duly executed charge for payment of a debt, the days of charge expire without payment (unless the circumstances are shown to be such as are mentioned in subsection (1A)),
(cb)a decree of adjudication of any part of the debtor’s estate is granted, either for payment or in security (unless the circumstances are shown to be such as are mentioned in subsection (1A)),
(cc)a debt constituted by a decree or document of debt (as defined in section 10 of the Debt Arrangement and Attachment (Scotland) Act 2002) is being paid by the debtor under a debt payment programme under Part 1 of that Act and the programme is revoked (unless the circumstances are shown to be such as are mentioned in subsection (1A)),]
(d)a creditor of the debtor, in respect of a liquid debt which amounts (or liquid debts which in aggregate amount) to not less than £750 or such sum as may be prescribed, has served on the debtor, by personal service by an officer of court, a demand in the prescribed form requiring him either to pay the debt (or debts) or to find security for its (or their) payment, and within 3 weeks after the date of service of the demand the debtor has not—
(i)complied with the demand; or
(ii)intimated to the creditor, by recorded delivery, that he denies that there is a debt or that the sum claimed by the creditor as the debt is immediately payable.
[F5In paragraph (d) above, “liquid debt” does not include a sum payable under a confiscation order; and in the foregoing provisions of this subsection—
“charging order” has the meaning assigned F6. . . F6[F7. . . by section 78(2) of the Criminal Justice Act 1988][F8or by section 27(2) of the Drug Trafficking Act 1994];
[F9“relevant detention power” means section 44A, 47J, 47K, 47M, 47P, 122A, 127J, 127K, 127M, 127P, 193A, 195J, 195K, 195M or 195P of the Proceeds of Crime Act 2002;]
F10. . . [F11 “confiscation order” and “restraint order” mean a confiscation order or a restraint order made under Part 2, 3 or 4 of the Proceeds of Crime Act 2002]].
[F12(1A)The circumstances are—
(a)that, at the time of the occurrence, the debtor was able and willing to pay the debtor’s debts as they became due, or
(b)that, but for the debtor’s property being affected by a restraint order or being subject to a confiscation order or charging order, the debtor would at that time have been able to pay those debts as they became due.]
(2)A debtor’s apparent insolvency shall continue, if constituted under—
(a)subsection (1)(a) above, until his discharge; F13. . .
(b)subsection (1)(b), (c) or (d) above, until he becomes able to pay his debts and pays them as they become due [F14; or
(c)subsection (1)(ba), [F15until] main proceedings have ended].
(3)The apparent insolvency of—
(a)a partnership shall be constituted [F16(or, as the case may be, again constituted)] either in accordance with the foregoing provisions of this section or if any of the partners is apparently insolvent for a debt of the partnership;
(b)an unincorporated body shall be constituted [F17(or, as the case may be, again constituted)] if a person representing the body is apparently insolvent, or a person holding property of the body in a fiduciary capacity is apparently insolvent, for a debt of the body.
(4)Notwithstanding subsection (2) of section 6 of this Act, the apparent insolvency of an entity such as is mentioned in paragraph (a) or (b) of that subsection may be constituted (or as the case may be constituted anew) under subsection (1) above; and any reference in the foregoing provisions of this section to a debtor shall, except where the context otherwise requires, be construed as including a reference to such an entity.
Textual Amendments
F1Words inserted by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 45(5)(b)(i), 47(4)(a)
F2Words in s. 7(1)(b) inserted (1.6.2015) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 7 para. 47(a); S.I. 2015/983, arts. 2(2)(e), 3(b)
F3S. 7(1)(ba) inserted (8.9.2003) by The Insolvency (Scotland) Regulations 2003 (S.I. 2003/2109), reg. 8(1)
F4S. 7(1)(c)-(cc) substituted for s. 7(1)(c) (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 7(a); S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)
F5Words added by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 45(5)(b)(iii), 47(4)(a)
F6S. 7(1): words in the definition of charging order omitted (3.2.1995) by 1994 c. 37, ss. 65(1), 69(2), Sch. 1 para. 10(2)(a)
F7Words inserted by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 123, 170, Sch. 8 para. 16, Sch. 15 para. 108(a)
F8S. 7(1): words in the definition of charging order inserted (3.2.1995) by 1994 c. 37, ss. 65(1), 69(2), Sch. 1 para. 10(2)(a)
F9Words in s. 7(1) inserted (1.6.2015 for specified purposes) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 7 para. 47(b); S.I. 2015/983, arts. 2(2)(e), 3(b)
F10Words in s. 7(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))
F11Words in s. 7(1) substituted (24.3.2003) by virtue of Proceeds of Crime Act 2002 (c. 29), ss. 456, 458(1)(3), Sch. 11 para. 15(3); S.I. 2003/333, art. 2(1), Sch. (subject to transitional provisions in arts. 3-14) (as amended by S.I. 2003/531); S.S.I. 2003/210, art. 2(1)(b), Sch. (subject to transitional provisions in arts. 3-7)
F12S. 7(1A) inserted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 7(b); S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)
F13Word in s. 7(2) repealed (8.9.2003) by The Insolvency (Scotland) Regulations 2003 (S.I. 2003/2109), reg. 8(2)(a)
F14S. 7(2)(c) and word inserted (8.9.2003) by The Insolvency (Scotland) Regulations 2003 (S.I. 2003/2109), reg. 8(2)(b)
F15Word in s. 7(2)(c) substituted (1.4.2008) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 36, 227(3), Sch. 1 para. 6 (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))
F16Words in s. 7(3)(a) inserted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 7(c); S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)
F17Words in s. 7(3)(b) inserted (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 3 para. 7(c); S.S.I. 2014/261, art. 3 (with arts. 4-7, 12) (as amended by S.S.I. 2015/54, art. 2)