Bankruptcy (Scotland) Act 1985

7 Meaning of apparent insolvency

(1) A debtor's apparent insolvency shall be constituted (or, where he is already apparently insolvent, constituted anew) whenever—

(a) his estate is sequestrated, or he is adjudged bankrupt in England or Wales or Northern Ireland ; or

(b) 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 a poinding 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 circumstance occurred, the debtor was able and willing to pay his debts as they became due ; 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.

(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.