Bankruptcy (Scotland) Act 1985

Effect of sequestration on diligence

37 Effect of sequestration on diligence

(1) The order of the court awarding sequestration shall as from the date of sequestration have the effect, in relation to diligence done (whether before or after the date of sequestration) in respect of any part of the debtor's estate, of—

(a) a decree of adjudication of the heritable estate of the debtor for payment of his debts which has been duly recorded in the register of inhibitions and adjudications on that date; and

(b) an arrestment in execution and decree of furthcoming, an arrestment in execution and warrant of sale, and a completed poinding,

in favour of the creditors according to their respective entitlements.

(2) No inhibition on the estate of the debtor which takes effect within the period of 60 days before the date of sequestration shall be effectual to create a preference for the inhibitor and any relevant right of challenge shall, at the date of sequestration, vest in the permanent trustee as shall any right of the inhibitor to receive payment for the discharge of the inhibition :

Provided that this subsection shall neither entitle the trustee to receive any payment made to the inhibitor before the date of sequestration nor affect the validity of anything done before that date in consideration of such payment

(3) In subsection (2) above, " any relevant right of challenge " means any right to challenge a deed voluntarily granted by the debtor if it is a right which vested in the inhibitor by virtue of the inhibition.

(4) No arrestment or poinding of the estate of the debtor (including any estate vesting in the permanent trustee under section 32(6) of this Act) executed—

(a) within the period of 60 days before the date of sequestration and whether or not subsisting at that date; or

(b) on or after the date of sequestration,

shall be effectual to create a preference for the arrester or poinder; and the estate so arrested or poinded, or the proceeds of sale thereof, shall be handed over to the permanent trustee.

(5) An arrester or poinder whose arrestment or poinding is executed within the said period of 60 days shall be entitled to payment, out of the arrested or poinded estate or out of the proceeds of the sale thereof, of the expenses incurred—

(a) in obtaining the extract of the decree or other document on which the arrestment or poinding proceeded ;

(b) in executing the arrestment or poinding ; and

(c) in taking any further action in respect of the diligence.

(6) No poinding of the ground in respect of the estate of the debtor (including any estate vesting in the permanent trustee under section 32(6) of this Act) executed within the period of 60 days before the date of sequestration or on or after that date shall be effectual in a question with the permanent trustee, except for the interest on the debt of a secured creditor, being interest for the current half-yearly term and arrears of interest for one year immediately before the commencement of that term.

(7) The foregoing provisions of this section shall apply to the estate of a deceased debtor which—

(a) has been sequestrated ; or

(b) was absolutely insolvent at the date of death and in respect of which a judicial factor has been appointed under section 11A of the [1889 c. 39.] Judicial Factors (Scotland) Act 1889,

within 12 months after his death, but as if for any reference to the date of sequestration and the debtor there were substituted respectively a reference to the date of the deceased's death and to the deceased debtor.

(8) It shall be incompetent on or after the date of sequestration for any creditor to raise or insist in an adjudication against the estate of a debtor (including any estate vesting in the permanent trustee under section 32(6) of this Act) or to be confirmed as executor-creditor on the estate.

(9) Where—

(a) a deceased debtor's estate is sequestrated ; or

(b) a judicial factor is appointed under section 11A of the [1889 c. 39.] Judicial Factors (Scotland) Act 1889 to administer his estate (in a case where the estate is absolutely insolvent),

within 12 months after the debtor's death, no confirmation as executor-creditor on that estate at any time after the debtor's death shall be effectual in a question with the permanent trustee or the judicial factor ; but the executor-creditor shall be entitled out of that estate, or out of the proceeds of sale thereof, to the expenses incurred by him in obtaining the confirmation.