Bankruptcy and Diligence (Scotland) Act 2024

Prospective

12 Failure of debtor to co-operate with trustee in sequestration S

(1) The Bankruptcy (Scotland) Act 2016 is modified by subsections (2) and (3).

(2) After section 147, insert—

“Failure of debtor to co-operate with trustee S

147A Debtor fails to co-operate: Accountant in Bankruptcy appointment as new trustee

(1) This section applies where—

(a) AiB is not the trustee in the sequestration,

(b) the period of 5 years beginning with the date of sequestration of a debtor’s estate has expired, and

(c) the debtor has not been discharged from that sequestration.

(2) The trustee in the sequestration may apply to AiB for authority to resign office on account of the debtor’s failure to co-operate.

(3) An application under subsection (2) must be made in the prescribed form and include information about—

(a) the nature and the extent of the debtor’s failure to co-operate with the trustee,

(b) the actions taken by the trustee to secure the debtor’s co-operation,

(c) any other matters that the trustee considers relevant, and

(d) details of every creditor known to the trustee.

(4) Before making an application under subsection (2), the trustee must—

(a) notify the debtor by sending an intention to resign notice, and

(b) give an intention to resign notice to every creditor known to the trustee.

(5) An intention to resign notice must—

(a) be in the prescribed form, and

(b) include a statement informing the recipient that the recipient has a right to make representations to AiB in relation to the application within 14 days beginning with the day on which the application is made.

(6) After receiving an application under subsection (2), AiB must—

(a) take into account any representations made by an interested person within 14 days beginning with the day on which the application is made, and

(b) if satisfied of the matters mentioned in subsection (7), issue to the trustee who made the application a notice in the prescribed form granting the application.

(7) The matters are—

(a) that the debtor has failed to co-operate with the trustee to such an extent that the trustee is prevented from carrying out the trustee's functions under this Act,

(b) that the failure is likely to continue, and

(c) that the trustee has taken all reasonable steps to secure the debtor’s co-operation.

(8) AiB—

(a) may request such further information from the trustee as AiB considers necessary to make a decision under subsection (6), and

(b) must notify the trustee, the debtor and every creditor known to AiB of its decision under subsection (6).

(9) Where a notice is issued under subsection (6)(b), 14 days after the notice is given—

(a) AiB is deemed to be the trustee,

(b) AiB must notify the debtor and every creditor known to AiB that AiB is deemed to be the trustee,

(c) AiB must make an appropriate entry in the register of insolvencies,

(d) the former trustee is not entitled to recover, other than by a claim in the final distribution of the debtor’s estate, outlays and remuneration payable under sections 132 and 133 (there being no effect on any outlays and remuneration paid to the former trustee before the issue of the notice),

(e) subsections (9) to (13) of section 69 apply in relation to the appointment of AiB as the new trustee as they apply in relation to the appointment of a new trustee under that section,

(f) section 116 applies as if there were substituted for subsection (2)—

“(2) AiB may at any time before the discharge of the debtor require the debtor to give an account in writing, in such form as may be prescribed, of the debtor’s current state of affairs.”, and

(g) section 138 applies to the sequestration with the modifications in subsection (10).

(10) The modifications are—

(a) in subsection (2), the words “after the date which is 12 months after the date on which sequestration is awarded” are omitted,

(b) in subsection (3), for “must, as soon as practicable after the date which is 12 months after the date on which sequestration is awarded” substitute “may, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee’s functions under this Act”,

(c) in subsection (6), for “must, as soon as practicable after the date which is 12 months after the date of the refusal” substitute “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act”.

147B Accountant in Bankruptcy appointment as new trustee: review and appeal

(1) The trustee may apply to AiB for a review of a decision under section 147A(6) to refuse an application.

(2) The debtor or any creditor may apply to AiB for a review of a decision under section 147A(6) to grant an application.

(3) Any application under subsection (1) or (2) must be made within 14 days beginning with the day of notification of the decision in question.

(4) If an application for review under subsection (2) is made, the grant of the application is suspended until the determination of that review by AiB.

(5) If an application for a review under subsection (1) or (2) is made, AiB must—

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

(b) confirm or revoke the decision within 28 days beginning with the day on which the application is made.

(6) If, under subsection (5)(b), AiB—

(a) revoke a decision to grant an application, AiB must revoke the notice given under section 147A(6)(b) granting the application,

(b) revoke a decision to refuse an application, AiB must issue a notice under section 147A(6)(b) granting the application, or

(c) confirm a decision to grant an application, section 147A(9) applies as if for the words “14 days after the notice is given” there were substituted “14 days after the AiB decision under section 147B(5)(b)”.

(7) The debtor, the trustee or any creditor may appeal to the sheriff against any decision of AiB under subsection (5)(b) within 14 days beginning with the day of the decision.

(8) If an appeal relating to a decision mentioned in subsection (6)(b) or (c) is made, the grant of the application is suspended until the determination of that appeal.

(9) If, on an appeal under subsection (7), the sheriff determines that an application which has been refused should be granted—

(a) the sheriff must order AiB to issue a notice under section 147A(6)(b) granting the application, and

(b) section 147A(9) applies as if the words “14 days after the notice is given” were omitted.

(10) If, on an appeal under subsection (7), the sheriff determines that an application which has been granted should be refused, the sheriff must order AiB to revoke the notice given under section 147A(6)(b) granting the application.

(11) The sheriff clerk must send AiB a copy of the sheriff’s decree.

(12) The decision of the sheriff on an appeal under subsection (7) is final.

147C Debtor fails to co-operate with AiB as trustee

(1) This section applies where—

(a) AiB is the trustee but was not appointed as trustee under section 147A,

(b) the period of 5 years beginning with the date of sequestration a debtor’s estate has expired, and

(c) the debtor has not been discharged from that sequestration.

(2) AiB, if satisfied of the matters mentioned in subsection (3), may make a determination that the debtor has failed to co-operate.

(3) The matters are—

(a) that the debtor has failed to co-operate with AiB as trustee to such an extent that AiB is prevented from carrying out the AiB’s functions as trustee under this Act,

(b) that the failure is likely to continue, and

(c) that AiB has taken all reasonable steps to secure the debtor’s co-operation.

(4) If AiB makes a determination under subsection (2)—

(a) AiB must notify the debtor and every creditor known to AiB that AiB has made a determination under subsection (2), and

(b) section 116 applies as if there were substituted for subsection (2)—

“(2) AiB may at any time before the discharge of the debtor require the debtor to give an account in writing, in such form as may be prescribed, of the debtor’s current state of affairs.”, and

(c) section 138(6) applies as if for the words “must, as soon as practicable after the date which is 12 months after the date of the refusal” there were substituted “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act.”.

(3) In section 214 of the Bankruptcy (Scotland) Act 2016, after paragraph (2)(q) insert—

“(qa) section 147B(5),”.

(4) In calculating a period of 5 years for the purposes of section 147A(1)(b) or section 147C(1)(b) of the Bankruptcy (Scotland) Act 2016, any part of that period which is before the commencement of subsection (1) may be included.

Commencement Information

I1 S. 12 not in force at Royal Assent, see s. 22(2)