Bankruptcy (Scotland) Act 1985 (repealed)

7 Meaning of apparent insolvency. S

(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) [F1 not being a person whose property is for the time being affected by a restraint order 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; or

(c) any of the following circumstances occurs—

(i) he grants a trust deed;

(ii) following the service on him of a duly executed charge for payment of a debt, the days of charge expire without payment;

(iii) following [F2 an attachment (or an attempt to attach)] or seizure of any of his moveable property in pursuance of a summary warrant for the recovery of rates or taxes, 14 days elapse without payment;

(iv) a decree of adjudication of any part of his estate is granted, either for payment or in security;

(v) his effects are sold under a sequestration for rent due by him; or

(vi) a receiving order is made against him in England or Wales,

unless it is shown that at the time when any such circumstances occurred, the debtor was able and willing to pay his debts as they became due [F3 or that but for his property being affected by a restraint order or subject to a confiscation, or charging, order he would be able to do so]; or

(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.

[F4 In 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 F5 . . . [F6 F5 . . . by section 78(2) of the Criminal Justice Act 1988][F7 or by section 27(2) of the Drug Trafficking Act 1994];

• “confiscation order” [F8 “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]]

(2) A debtor’s apparent insolvency shall continue, if constituted under—

(a) subsection (1)(a) above, until his discharge; or

(b) subsection (1)(b), (c) or (d) above, until he becomes able to pay his debts and pays them as they become due.

(3) The apparent insolvency of—

(a) a partnership shall be 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 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

F1 Words inserted by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 45(5)(b)(i), 47(4)(a)

F2 Words in s. 7(1)(c) substituted (30.12.2002) by Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17), ss. 61, 64, Sch. 3 Pt. 1 para. 15(2)

F3 Words inserted by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 45(5)(b)(ii), 47(4)(a)

F4 Words added by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 45(5)(b)(iii), 47(4)(a)

F5 S. 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)

F6 Words inserted by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 123, 170, Sch. 8 para. 16, Sch. 15 para. 108(a)

F7 S. 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)

F8 Words 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)