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Bankruptcy (Scotland) Act 2016

Type Act of the Scottish Parliament

Publication 2016-04-28

Last updated 2025-06-25

State In force

Jurisdiction Scotland

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Performance of certain functions of Accountant in Bankruptcy

201

(1) The functions of AiB, other than functions conferred by section 200, may be carried out on AiB's behalf by any member of AiB's staff authorised by AiB to do so.

(2) Without prejudice to subsection (1), AiB may appoint, on such terms and conditions as AiB considers appropriate, such persons as AiB considers fit to perform on AiB's behalf any of AiB's functions in respect of the sequestration of the estate of any debtor.

(3) A person appointed under subsection (2) must comply with such general or specific directions as AiB may from time to time give to such person as to the performance of those functions.

(4) AiB may pay a person so appointed such fee as AiB may consider appropriate.

Further duty of Accountant in Bankruptcy

202

AiB is, on receiving any notice under section 109(1) of the Insolvency Act 1986 in relation to a community interest company, to forward a copy of that notice to the Regulator of Community Interest Companies.

Directions to Accountant in Bankruptcy

203

(1) The Scottish Ministers may, after consultation with the Lord President of the Court of Session, give AiB general directions as to the performance of AiB's functions under this Act.

(2) Directions under this section may be given in respect of—

(a) all cases, or

(b) any class or description of cases,

but are not to be given in respect of a particular case.

(3) AiB must comply with any directions given under this section.

Conduct of proceedings in the sheriff court

204

(1) A person authorised by AiB may conduct civil proceedings in the sheriff court in relation to a function of AiB (including the functions listed in section 200).

(2) In subsection (1), “civil proceedings” are proceedings which are not in respect of an offence.

Fees for Accountant in Bankruptcy

205

(1) The Scottish Ministers may prescribe—

(a) the fees and outlays to be payable to AiB in respect of the exercise of any of AiB's functions under this Act,

(b) the time at or by which, and the manner in which, such fees and outlays are to be paid, and

(i) exemption from payment, or

(ii) the remission or modification of payment,

of any such fees or outlays.

(2) The Secretary of State may prescribe by regulations—

(a) the fees and outlays to be payable to AiB in respect of the exercise of any of AiB's functions under the Insolvency Act 1986,

(b) the time at or by which, and the manner in which, such fees and outlays are to be paid, and

(i) exemption from payment, or

(ii) the remission or modification of payment,

of any such fees or outlays.

PART 17 — Miscellaneous

Liabilities and rights of co-obligants

206

(1) Where a creditor has an obligant bound to the creditor along with the debtor for the whole or part of the debt, the obligant is not freed or discharged from the obligant's liability for the debt by reason of the discharge of the debtor or by virtue of the creditor's voting or drawing a dividend or assenting to, or not opposing, the discharge of the debtor.

(2) Subsection (3) applies where—

(a) the creditor has had a claim accepted in whole or in part, and

(b) the obligant holds a security over any part of the debtor's estate

(3) The obligant must account to the trustee in the sequestration so as to put the estate in the same position as if the obligant had paid the debt to the creditor and thereafter had had the obligant's claim accepted in whole or in part in the sequestration after deduction of the value of the security.

(4) The obligant may require and obtain at the obligant's own expense from the creditor an assignation of the debt on payment of the amount of the debt and on that being done may in respect of the debt submit a claim, and vote and draw a dividend, if otherwise legally entitled to do so.

(5) Subsection (4) is without prejudice to any right, under any rule of law, of a co-obligant who has paid the debt.

(6) In this section, “obligant” includes cautioner.

Member State liquidator deemed creditor

207

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Trustee’s duty to provide certain notices and copies of documents to member State liquidator

208

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Extortionate credit transactions

209

(1) This section applies where—

(a) a debtor is, or has been, party to a transaction for, or involving, the provision of credit to the debtor, and

(b) the debtor's estate is sequestrated.

(2) The sheriff may, on the application of the trustee in the sequestration, make an order with respect to the transaction if the transaction—

(a) is, or was, extortionate, and

(b) was not entered into more than 3 years before the date of sequestration.

(3) For the purposes of this section a transaction is extortionate if, having regard to the risk accepted by the person providing the credit—

(a) the terms of the transaction are, or were, such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit, or

(b) the transaction otherwise grossly contravened ordinary principles of fair dealing.

(4) It is to be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this section is, or as the case may be was, extortionate.

(5) An order under this section with respect to a transaction may contain such one or more of the following as the sheriff thinks fit—

(a) provision setting aside the whole or part of any obligation created by the transaction,

(b) provision otherwise varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held,

(c) provision requiring any person who is a party to the transaction to pay to the trustee any sums paid to that person, by virtue of the transaction, by the debtor,

(d) provision requiring any person to surrender to the trustee any property held by the person as security for the purposes of the transaction,

(e) provision directing accounts to be taken between any persons.

(6) Any sums required to be paid, or property required to be surrendered, to the trustee in accordance with an order under this section vest in the trustee.

(7) The powers conferred by this section are exercisable, in relation to a transaction, concurrently with any powers exercisable under this Act in relation to that transaction as a gratuitous alienation or unfair preference.

(8) In this section, “credit” has the same meaning as in the Consumer Credit Act 1974.

Sederunt book and other documents

210

(1) Whoever by virtue of this Act for the time being holds the sederunt book must make it available for inspection at all reasonable hours by any interested party; but this subsection is subject to subsection (2).

(2) As regards any case in which the person on whom a duty is imposed by subsection (1) is AiB, the Scottish Ministers may by regulations—

(a) limit the period for which the duty is so imposed, and

(b) prescribe conditions in accordance with which the duty is to be carried out.

(3) The trustee must insert in the sederunt book the information listed in schedule 5.

(4) The Scottish Ministers may by regulations modify schedule 5.

(5) An entry in the sederunt book is sufficient evidence of the facts stated in that entry, (except where the entry is founded on by the trustee in the sequestration in the trustee's own interest).

(6) Notwithstanding any provision of this Act, the trustee is not bound to insert in the sederunt book a document of a confidential nature.

(7) The trustee is not bound to exhibit to a person other than a commissioner or AiB any document in the trustee's possession which is of a confidential nature.

(8) An extract from the register of insolvencies bearing to be signed by AiB is sufficient evidence of the facts stated in the extract.

Power of court to cure defects in procedure

211

(1) On the application of a person having an interest, the sheriff may—

(a) if there has been a failure to comply with a requirement of this Act (or of regulations under this Act), make an order—

(i) waiving the failure, and

(ii) so far as practicable, restoring any person prejudiced by the failure to the position that person would have been in but for the failure, or

(b) if for any reason anything required or authorised to be done in, or in connection with, the sequestration process cannot be done, make such order as may be necessary to enable the thing to be done.

(2) An order under subsection (1) may waive a failure to comply with a requirement mentioned in section 212(1)(a) or (b) only if the failure relates to—

(a) a document to be lodged with the sheriff,

(b) a document issued by the sheriff, or

(3) In an order under subsection (1), the sheriff may impose such conditions, including conditions as to expenses, as the sheriff thinks fit and may—

(a) authorise, or dispense with, the performance of any act in the sequestration process,

(b) appoint as trustee on the debtor's estate AiB or a person who would be eligible to be elected under section 49 (whether or not in place of an existing trustee),

(4) Subsection (5) applies where the sheriff, or as the case may be the Court of Session, considers that a remit from the sheriff to the Court of Session is desirable because of the importance or complexity of the matters raised by an application under subsection (1).

(5) The application—

(a) may at any time be so remitted—

(i) of the sheriff's own accord, or

(ii) on an application by a person having an interest, and

(b) must be so remitted, if the Court of Session so directs on an application by any such person.

Power of Accountant in Bankruptcy to cure defects in procedure

212

(1) AiB may make an order—

(a) correcting a clerical or incidental error in a document required by or under this Act, or

(b) waiving a failure—

(i) to comply with a time limit specified by or under this Act, and

(ii) for which no provision is made by or under this Act.

(2) An order under subsection (1) may be made—

(a) on the application of any person having an interest, or

(b) without an application if AiB proposes to correct or waive a matter mentioned in that subsection.

(3) The applicant must notify all interested persons where an application is made under subsection (2)(a).

(4) AiB must notify all interested persons where AiB proposes to make an order by virtue of subsection (2)(b).

(5) A notice under subsection (3) or (4) must inform the recipient that the recipient has a right to make representations to AiB in relation to the application or the proposed order within 14 days beginning with the day on which the notice is given.

(6) Before making an order under subsection (1), AiB must take into account any representations made by an interested person.

(7) An order under subsection (1) may—

(a) so far as practicable, restore any person prejudiced by the error or failure to the position that person would have been in but for the error or failure, and

(b) impose such conditions, including conditions as to expenses, as AiB thinks fit.

(8) After making an order under subsection (1) which affects a matter recorded in the Register of Inhibitions, AiB must without delay send a certified copy of the order to the keeper of that register for recording in that register.

Decision under section 212(1): review

213

(1) An interested person may apply to AiB for a review of a decision of AiB to make, or refuse to make, an order under section 212(1).

(2) Any application under subsection (1) must be made within 14 days beginning with the day of that decision.

(3) If an application under subsection (1) 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, amend or revoke the decision within 28 days beginning with the day on which the application is made.

(4) An interested person may appeal to the sheriff against a decision by AiB under subsection (3)(b) within 14 days beginning with the day of that decision.

(5) The decision of the sheriff on an appeal under subsection (4) is final.

Review of decision by Accountant in Bankruptcy: grounds of appeal

214

(1) For the avoidance of doubt, an appeal under a provision mentioned in subsection (2) may be made on—

(a) a matter of fact,

(b) a point of law, or

(2) The provisions are—

(a) section 27(8),

(b) section 37(5),

(d) section 57(8),

(e) section 59(4),

(f) section 61(8),

(g) section 64(8),

(h) section 65(7),

(i) section 68(4),

(j) section 71(4),

(k) section 73(5),

(l) section 92(5),

(m) section 97(5),

(n) section 110(7),

(o) section 127(5),

(p) section 139(6),

(q) section 144(6),

(qa) section 147B(5),

(r) section 149(4),

(s) section 151(7),

(t) section 161(8),

(u) section 213(4), and

(v) paragraph 3(9) of schedule 2.

Debtor to co-operate with trustee

215

(1) The debtor must take every practicable step (and in particular must execute any document) which may be necessary to enable the trustee in the sequestration to perform the functions conferred on the trustee by this Act.

(2) If the sheriff, on the trustee's application, is satisfied—

(a) that the debtor has failed to execute a document in compliance with subsection (1), the sheriff may authorise the sheriff clerk to do so, or

(b) that the debtor has failed to comply in any other respect with that subsection, the sheriff may order the debtor to do so.

(3) The execution, by virtue of paragraph (a) of subsection (2), of a document by the sheriff clerk has the like force and effect in all respects as if it had been executed by the debtor.

(4) If the debtor fails to comply with an order under subsection (2)(b) then the debtor commits an offence.

(5) If the debtor is convicted of an offence under subsection (4) then the debtor is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or—

(i) in a case where the debtor has previously been convicted of an offence inferring dishonest appropriation of property or an attempt at dishonest appropriation of property, to imprisonment for a term not exceeding 6 months, or

(ii) in any other case, to imprisonment for a term not exceeding 3 months,

or both to a fine not exceeding the statutory maximum and to such imprisonment as is mentioned, in relation to the case in question, in sub-paragraph (i) or (ii),

(b) on conviction on indictment—

(i) to a fine or to imprisonment for a term not exceeding 2 years, or

(ii) both to a fine and to such imprisonment.

(6) In this section, “debtor” includes a debtor discharged under this Act.

Arbitration and compromise

216

(1) The trustee in the sequestration may (but if there are commissioners then only with their consent or with the consent of the creditors or of the sheriff)—

(a) refer to arbitration any claim or question, of whatever nature, arising in the course of the sequestration, or

(b) make a compromise with regard to any claim, of whatever nature, made against or on behalf of the sequestrated estate.

(2) Where a claim or question is referred to arbitration under this section, AiB may vary any time limit for carrying out a procedure under this Act.

(3) A decree arbitral on a reference under paragraph (a) of subsection (1), or a compromise under paragraph (b) of that subsection, is binding on the creditors and on the debtor.

Meetings of creditors and commissioners

217

Part 1 of schedule 6 has effect in relation to meetings of creditors other than the statutory meeting, Part 2 in relation to all meetings of creditors and Part 3 in relation to meetings of commissioners.

General offences by debtor etc.

218

(1) Subsection (2) applies where, during the relevant period, a debtor makes a false statement in relation to the debtor's assets or financial or business affairs —

(a) to a creditor, or

(b) to a person concerned in the administration of the debtor's estate.

(2) Unless the debtor shows that the debtor neither knew nor had reason to believe that the statement was false, the debtor commits an offence.

(3) Subsection (4) applies where, during the relevant period, a debtor or some other person acting in the debtor's interest (whether or not with the debtor's authority)—

(a) destroys,

(b) damages,

(d) disposes of, or

(e) removes from Scotland,

any part of the debtor's estate or any document relating to the debtor's assets or business or financial affairs.

(4) Unless the perpetrator shows that it was not done with intent to prejudice the creditors, the perpetrator commits an offence.

(5) If, after the date of sequestration of the estate of a debtor, the debtor (being a person who is absent from Scotland) fails when required by the court to come to Scotland for any purpose connected with the administration of that estate, then the debtor commits an offence.

(6) Subsection (7) applies where, during the relevant period, a debtor or some other person acting in the debtor's interest (whether or not with the debtor's authority) falsifies any document relating to the debtor's assets or business or financial affairs.

(7) Unless the perpetrator shows that the perpetrator had no intention to mislead the trustee, a commissioner or any creditor, the perpetrator commits an offence.

(8) If a debtor whose estate is sequestrated—

(a) knows that a person has falsified a document relating to the debtor's assets or business or financial affairs, and

(b) fails, within one month of acquiring that knowledge, to report it to the trustee in the sequestration,

then the debtor commits an offence.

(9) Subsection (10) applies where, during the relevant period, a person (in this subsection and in subsection (10) referred to as “P”) who is absolutely insolvent—

(a) transfers anything to another person for an inadequate consideration, or

(b) grants an unfair preference to any of P's creditors.

(10) Unless P shows that it was not done with intent to prejudice P's creditors, P commits an offence.

(11) Subsection (12) applies where, at any time in the period of one year ending with the sequestration of the estate of a debtor who is engaged in trade or business, the debtor otherwise than in the ordinary course of the trade or business pledges or disposes of property which the debtor has obtained on credit and has not paid for.

(12) Unless the debtor shows that it was not done with intent to prejudice the debtor's creditors, the debtor commits an offence.

(13) If a debtor, either alone or jointly with another person, obtains credit—

(a) to the extent of £2,000 or such other sum as may be prescribed or more, or

(b) of any amount where, at the time the credit is obtained, the debtor has debts amounting to £1,000 or such other sum as may be prescribed or more,

without giving the person from whom the credit is obtained the relevant information about the debtor's status, then the debtor commits an offence.

General offences: supplementary and penalties

219

(1) For the purpose of calculating an amount of credit mentioned in subsection (13) of section 218 or of debts mentioned in paragraph (b) of that subsection, no account is to be taken of any credit obtained or, as the case may be, of any liability for charges in respect of—

(a) any of the supplies mentioned in section 222(4), and

(b) any council tax (within the meaning of section 99(1) of the Local Government Finance Act 1992.

(2) For the purposes of section 218(13)—

(a) “debtor” means—

(i) a person whose estate has been sequestrated,

(ii) a person who has been adjudged bankrupt in England and Wales or in Northern Ireland, or

(iii) a person subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England and Wales,

being, in the case of a person mentioned in sub-paragraph (i) or (ii), a person who has not been discharged,

(b) the reference to the debtor obtaining credit includes a reference to a case where goods—

(i) are hired to the debtor under a hire-purchase agreement, or

(ii) are agreed to be sold to the debtor under a conditional sale agreement, and

(i) the debtor's estate has been sequestrated and that the debtor has not been discharged,

(ii) the debtor is an undischarged bankrupt in England and Wales or in Northern Ireland, or

(iii) the debtor is subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England and Wales.

(3) In section 218—

“the relevant period” means the period commencing one year immediately before the date of sequestration of the debtor's estate and ending with the debtor's discharge, and

references to intent to prejudice creditors include references to intent to prejudice an individual creditor.

(4) If a person does, or fails to do, in England and Wales or in Northern Ireland anything which if done, or as the case may be not done, in Scotland is an offence under section 218(2), (4), (7), (8), (10) or (12), then that person commits an offence under the subsection in question.

(5) A person convicted of an offence under section 218 is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or—

(i) in a case where the person has previously been convicted of an offence inferring dishonest appropriation of property or an attempt at dishonest appropriation of property, to imprisonment for a term not exceeding 6 months, or

(ii) in any other case, to imprisonment for a term not exceeding 3 months,

or both to a fine not exceeding the statutory maximum and to such imprisonment as is mentioned, in relation to the case in question, in sub-paragraph (i) or (ii), or

(b) on conviction on indictment, to a fine, or—

(i) in the case of an offence under section 218(2), (4), (7) or (12), to imprisonment for a term not exceeding 5 years, or

(ii) in any other case, to imprisonment for a term not exceeding 2 years,

or both to a fine and to such imprisonment as is mentioned, in relation to the case in question, in sub-paragraph (i) or (ii).

Summary proceedings

220

(1) Summary proceedings for an offence under this Act may be commenced at any time within 12 months after the date on which evidence sufficient in the opinion of the Lord Advocate to justify the proceedings comes to the Lord Advocate's knowledge.

(2) But such proceedings must not be commenced by virtue of this section more than 3 years after the commission of the offence.

(3) Section 136(3) of the Criminal Procedure (Scotland) Act 1995 (date of commencement of summary proceedings) has effect for the purposes of this section as it has for the purposes of that section.

(4) For the purposes of subsection (1), a certificate of the Lord Advocate as to the date on which the evidence in question came to the Lord Advocate's knowledge is conclusive evidence of the date on which it did so.

Outlays of insolvency practitioner in actings as interim trustee or trustee

221

The Scottish Ministers may, by regulations, provide for the premium (or a proportionate part of the premium) of any bond of caution or other security required, for the time being, to be given by an insolvency practitioner to be taken into account as part of the outlays of the practitioner in the practitioner's actings as an interim trustee or as trustee in the sequestration.

Supplies by utilities

222

(1) This section applies where on any day (“the relevant day”)—

(a) sequestration is awarded in a case where a debtor application was made,

(b) a warrant is granted under section 22(3) in a case where the petition was presented by a creditor or by a trustee acting under a trust deed, or

(2) If a request falling within subsection (3) is made for the giving, after the relevant day, of any of the supplies mentioned in subsection (4), the supplier—

(a) may make it a condition of the giving of the supply that the office holder personally guarantee the payment of any charges in respect of the supply, and

(b) is not to make it a condition (or to do anything which has the effect of making it a condition) of the giving of the supply that any outstanding charges in respect of a supply given to the debtor before the relevant day are paid.

(3) A request falls within this subsection if it is made—

(a) by or with the concurrence of the office holder, and

(b) for the purposes of any business which is, or has been, carried on by or on behalf of the debtor.

(4) The supplies are—

(a) a supply of gas by a gas supplier, within the meaning of Part 1 of the Gas Act 1986,

(aa) a supply of gas by a person within paragraph 1 of schedule 2A of the Gas Act 1986 (supply by landlords etc.),

(b) a supply of electricity by an electricity supplier, within the meaning of Part 1 of the Electricity Act 1989,

(ba) a supply of electricity by a class of person within Class A (small suppliers) or Class B (resale) of schedule 4 of the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (S.I. 2001/3270),

(ca) a supply of water by a water services provider within the meaning of the Water Services etc. (Scotland) Act 2005,

(cb) a supply of water by a person who has an interest in the premises to which the supply is given,

(d) a supply of communications services by a provider of a public electronic communications service.

(e) a supply of communications services by a person who carries on a business which includes giving such supplies, and

(f) a supply of goods or services mentioned in subsection (5A) by a person who carries on a business which includes giving such supplies, where the supply is for the purpose of enabling or facilitating anything to be done by electronic means.

(5) In subsection (4)(d) “communications services” do not include electronic communications services to the extent that they are used to broadcast, or otherwise transmit, programme services (within the meaning of the Communications Act 2003).

(5A) The goods and services referred to in subsection (4)(f) are—

(a) point of sale terminals,

(b) computer hardware and software,

(d) data storage and processing,

(e) website hosting.

(6) In this section, “the office holder” means, as the case may be—

(a) the interim trustee,

(b) the trustee in the sequestration, or

Disqualification provisions: power to make regulations

223

(1) The Scottish Ministers may make regulations under this section in relation to a disqualification provision.

(2) A “disqualification provision” is a provision, made by or under any enactment, which disqualifies (whether permanently or temporarily and whether absolutely or conditionally) a relevant debtor or a category of relevant debtors from—

(a) being elected or appointed to an office or position,

(b) holding an office or position, or

(3) In subsection (2), the reference to a provision which disqualifies a person conditionally includes a reference to a provision which enables the person to be dismissed.

(4) Regulations under subsection (1) may repeal or revoke the disqualification provision.

(5) Regulations under subsection (1) may amend, or modify the effect of, the disqualification provision—

(a) so as to reduce the category of relevant debtors to whom the disqualification provision applies,

(b) so as to extend the disqualification provision to some or all natural persons who are subject to a bankruptcy restrictions order,

(c) so that the disqualification provision applies only to some or all natural persons who are subject to a bankruptcy restrictions order,

(d) so as to make the application of the disqualification provision wholly or partly subject to the discretion of a specified person, body or group.

(6) Regulations made by virtue of subsection (5)(d) may provide for a discretion to be subject to—

(a) the approval of a specified person or body,

(b) appeal to a specified person, body, court or tribunal.

(7) The Scottish Ministers may be specified for the purposes of subsection (5)(d) or (6)(a) or (b).

(8) In this section, “bankruptcy restrictions order” includes—

(a) a bankruptcy restrictions order made under paragraph 1 of schedule 4A of the Insolvency Act 1986, and

(b) a bankruptcy restrictions undertaking entered into under paragraph 7 of that schedule.

(9) In this section, “relevant debtor” means a debtor—

(a) whose estate has been sequestrated,

(b) who has granted (or on whose behalf has been granted) a trust deed,

(d) who, in England and Wales or in Northern Ireland, has made an agreement with the debtor's creditors—

(i) for a composition in satisfaction of the debtor's debts,

(ii) for a scheme of arrangement of the debtor's affairs, or

(iii) for some other kind of settlement or arrangement.

(10) Regulations under this section may make—

(a) provision generally or for a specified purpose only,

(b) different provision for different purposes, and

Regulations: applications to Accountant in Bankruptcy etc.

224

(1) The Scottish Minsters may, by regulations, make provision in relation to the procedure to be followed in relation to—

(a) an application to AiB under this Act,

(b) an application to AiB for a review under this Act,

(2) In this section, “decision” includes any appointment, determination, direction, award, acceptance, rejection, adjudication, requirement, declaration, order or valuation made by AiB.

(3) Regulations under subsection (1) may in particular make provision for, or in connection with—

(a) the procedure to be followed by the person making an application,

(b) the form of any report or other document that may be required for the purposes of an application or a decision,

(d) time limits applying in relation to the procedure,

(e) the procedure to be followed in connection with the production and recovery of documents relating to an application or a decision,

(f) the procedure to be followed (including provision about those entitled to participate) in determining an application or making a decision, and

(g) the procedure to be followed after an application is determined or a decision is made.

(4) Regulations under subsection (1) may—

(a) include such supplementary, incidental or consequential provision as the Scottish Minsters consider appropriate, or

(b) modify any enactment (including this Act).

(5) This section is without prejudice to section 194.

PART 18 — General

Regulations: general

225

(1) This section relates to regulations made under this Act by the Scottish Ministers.

(2) Such regulations may make different provision for different cases or classes of case.

(3) Subject to subsections (4) and (5), the regulations are subject to the negative procedure.

(4) Regulations under—

(a) section 2(4), (5) or (8)(a), 4(2)(b), 7(1), 9(4), 89(1), 94(7), 112(7)(g), 166(2)(b) or (c), 169, 170(1)(b) or (e), 174(2) or (3), 175(1), 181(2), 183(1)(a) or (b), 184(1)(b) or (2)(a), 186(3) or (9), 194(1) , 198(9) or 223,

(b) section 224(1) and containing provisions which add to, replace or omit any part of the text of an Act or of an Act of the Scottish Parliament, or

are subject to the affirmative procedure.

(5) Regulations made under section 237(2) are not subject to the negative procedure or to the affirmative procedure.

Modification of regulation making powers

226

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Variation of references to time, money etc.

227

For any reference in this Act to—

(a) a period of time,

(b) an amount of money, or

there may be prescribed, in substitution, some other period or as the case may be some other amount or fraction.

Interpretation

228

(1) In this Act, unless the context otherwise requires—

“the 2002 Act” means the Debt Arrangement and Attachment (Scotland) Act 2002,

“Accountant in Bankruptcy” (or “AiB”) is to be construed in accordance with section 199,

“accounting period” is to be construed in accordance with section 130(2),

“apparent insolvency” and “apparently insolvent” are to be construed in accordance with section 16,

“appropriate bank or institution” means—the Bank of England,a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits,an EEA firm of the kind mentioned in paragraph 5(b) of schedule 3 of that Act which has permission under paragraph 15 of that schedule (as a result of qualifying for authorisation under paragraph 12 of that schedule) to accept deposits, ora person who is exempt from the general prohibition in respect of accepting deposits as a result of an exemption order made under section 38(1) of that Act,

“associate” is to be construed in accordance with section 229,

“bankruptcy restrictions order” has the meaning given by section 155(1),

“business” means the carrying on of any activity, whether for profit or not,

“centre of main interests” has the same meaning as in the EU insolvency proceedings regulation,

“commissioner”, except in the expression “examining commissioner”, is to be construed in accordance with section 76,

“common financial tool” has the meaning given by section 89(1),

“court” means Court of Session or sheriff,

“DAS register” has the meaning given by section 195(4)(b),

“date of sequestration” has the meaning given by section 22(7),

“debt advice and information package” has the meaning given by section 3(2),

“debtor” includes, without prejudice to the expression's generality, an entity whose estate may be sequestrated by virtue of section 6, a deceased debtor, a deceased debtor's executor or a person entitled to be appointed a deceased debtor's executor,

“debtor application” means an application for sequestration made to AiB under section 2(1)(a), 5(a) or 6(3)(a), (4)(b) or (7)(a),

“debtor contribution order” has the meaning given by section 90(1),

“debtor's contribution” has the meaning given by section 89(1),

“establishment” has the meaning given by Article 2(10) of the EU insolvency proceedings regulation,

“the EU insolvency proceedings regulation” means Regulation (EU) 2015/848 of the European Parliament and of the Council on insolvency proceedings as it forms part of domestic law on and after exit day,

“examination” means a private examination under section 118 or a public examination under section 119,

“examining commissioner” is to be construed in accordance with section 120(3),

“interim bankruptcy restrictions order” is to be construed in accordance with section 160,

“interim trustee” is to be construed in accordance with sections 53 and 54,

“money adviser” has the meaning given by section 4(2),

“original trustee” is to be construed in accordance with section 49(1)(a),

“postponed debt” has the meaning given by section 129(4),

“preferred debt” has the meaning given by section 129(2),

“prescribed” means prescribed by regulations made by the Scottish Ministers,

“protected trust deed” is to be construed in accordance with section 163,

“qualified creditor” and “qualified creditors” are to be construed in accordance with section 7(1),

“qualified to act as an insolvency practitioner” is to be construed in accordance with section 390 of the Insolvency Act 1986 (persons not qualified to act as insolvency practitioners),

“register of insolvencies” has the meaning given by section 200(1)(c),

“relevant person” has the meaning given by section 118(2),

“replacement trustee” is to be construed in accordance with section 49(1)(b),

“secured creditor” means a creditor who holds a security for a debt over any part of the debtor's estate,

“security” means any security, heritable or moveable, or any right of lien, retention or preference,

“sederunt book” means the sederunt book maintained under section 50(1)(e),

“sequestration proceedings” includes a debtor application (and analogous expressions are to be construed accordingly),

“statement of assets and liabilities” means a document (including a copy of a document) in such form as may be prescribed containing—a list of the debtor's assets and liabilities,a list of the debtor's income and expenditure, andsuch other information as may be prescribed,

“statement of undertakings” means the statement of debtor undertakings sent to the debtor under section 51(14) or 54(4) or, in the case of a debtor application, given by the debtor in making the application,

“statutory meeting” has the meaning given by section 43,

“trust deed” means—a voluntary trust deed granted by or on behalf of a debtor whereby the debtor's estate (other than such of that estate as would not, under any provision of this or any other enactment, vest in the trustee were that estate sequestrated) is conveyed to the trustee for the benefit of the debtor's creditors generally, andany other trust deed which would fall within paragraph (a) but for—the exclusion from the estate conveyed to the trustee of the whole or part of the debtor's dwellinghouse, where a secured creditor holds a security over it, andthe fact that the debtor's estate is not conveyed to the trustee for the benefit of creditors generally because the secured creditor has, at the debtor's request, agreed before the trust deed is granted not to claim under the trust deed for any of the debt in respect of which the security is held,

“trustee vote” is to be construed in accordance with section 49(1) and (2), and

“unfair preference” means a preference created as is mentioned in subsection (1) of section 99 by a transaction to which subsection (5) of that section applies.

(2) The expressions in the definition of “appropriate bank or institution” in subsection (1) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000,

(b) any relevant order under that section, and

(3) In paragraph (b)(i) of the definition of “trust deed” in subsection (1), “the debtor's dwellinghouse” means a dwellinghouse (including any yard, garden, outbuilding or other pertinents) which, on the day immediately preceding the date the trust deed was granted—

(a) the debtor (whether alone or in common with any other person)—

(i) owned, or

(ii) leased under a long lease (“long lease” having the same meaning as in section 9(2) of the Land Registration etc. (Scotland) Act 2012), and

(b) was the debtor's sole or main residence.

(4) For the purposes of subsection (3)(b), a dwellinghouse may be the debtor's sole or main residence irrespective of whether it is used, to any extent, by the debtor for the purposes of any profession, trade or business.

(5) Any reference in this Act to a debtor being absolutely insolvent is to be construed as a reference to the debtor's liabilities being greater than the debtor's assets; and any reference to a debtor's estate being absolutely insolvent is to be construed accordingly.

(6) Any reference in this Act to value of the creditors is, in relation to any matter, a reference to the value of their claims as accepted for the purposes of that matter.

(7) Any reference in this Act to “the creditors” in the context of their giving consent or doing any other thing is, unless the context otherwise requires, to be construed as a reference to the majority in value of such creditors as vote in that context at a meeting of creditors.

(8) Any reference in this Act to any of the actings mentioned in subsection (9) barring the effect of any enactment or rule of law relating to the limitation of actions is to be construed as a reference to that act having the same effect, for the purposes of that enactment or rule of law, as an effective acknowledgement of the creditor's claim.

(9) The actings are—

(a) the presentation of a petition for sequestration,

(b) the concurrence in a debtor application, and

(10) Any reference in this Act to any such enactment as is mentioned in subsection (8) does not include a reference to an enactment which implements or gives effect to any international agreement or obligation.

(11) Any reference in this Act, however expressed, to the time when a petition for sequestration is presented is to be construed as a reference to the time when the petition is received by the sheriff clerk.

(12) Any reference in this Act, however expressed, to the time when a debtor application is made is to be construed as a reference to the time when the application is received by AiB.

Meaning of “associate”

229

(1) For the purposes of this Act, any question whether a person is an associate of another person must be determined in accordance with the following provisions of this section.

(2) Subsection (1) is subject to section 230(1).

(3) And any reference, whether in the following provisions of this section or in regulations under section 230(1), to a person being an associate of another person is to be taken to be a reference to their being associates of each other.

(4) A person (in this subsection referred to as “A”) is an associate of a natural person (in this subsection referred to as “B”) if A is—

(a) B's spouse or civil partner,

(b) a relative of B or of B's spouse or civil partner, or

(5) A person (in this subsection referred to as “C”) is an associate of any person (in this subsection referred to as “D”) with whom C is in partnership and of any person who is an associate of D.

(6) A firm is an associate of any person who is a member of the firm.

(7) For the purposes of this section, a person (in this subsection referred to as “E”) is a relative of a natural person (in this subsection referred to as “F”) if E is F's brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant treating any relationship of the half-blood as a relationship of the whole-blood and the stepchild or adopted child of someone (in this subsection referred to as “S”) as S's child.

(8) References in this section to a spouse or civil partner include references to a former spouse or civil partner and a reputed spouse or civil partner.

(9) A person (in this subsection referred to as “G”) is an associate of any person whom G employs or by whom G is employed.

(10) For the purposes of subsection (9), any director or other officer of a company is to be treated as employed by the company.

(11) A company is an associate of another company if—

(a) the same person has control of both, or if a person (in this subsection referred to as “H”) has control of one and persons who are H's associates have control of the other, or

(b) a group of two or more persons has control of each company and the groups either—

(i) consist of the same persons, or

(ii) could be regarded as consisting of the same persons by treating (in one case or more) a member of either group as replaced by a person of whom that member is an associate.

(12) A company is an associate of another person (in this subsection referred to as “J”) if—

(a) J has control of it, or

(b) J and persons who are J's associates together have control of it.

(13) For the purposes of this section, a person (in this subsection referred to as “K”) is taken to have control of a company—

(a) if the directors of the company, or of another company which has control of it, (or any of them) are accustomed to act in accordance with K's directions or instructions, or

(b) if K is entitled to exercise, or control the exercise of, ⅓ or more of the voting power at any general meeting of the company or of another company which has control of the company.

(14) Where two or more persons together satisfy either of the conditions mentioned in subsection (13), they are taken to have control of the company.

(15) In subsections (10) to (14), “company” includes any body corporate (whether incorporated in Great Britain or elsewhere).

“Associates”: regulations for the purposes of section 229

230

(1) The Scottish Ministers may by regulations—

(a) amend section 229 so as to provide further categories of persons who, for the purposes of this Act, are to be associates of other persons, and

(b) provide that any or all of subsections (4) to (15) of that section (or any subsection added to that section by virtue of paragraph (a))—

(i) is to cease to apply, whether in whole or in part, or

(ii) is to apply subject to such modifications as they may specify in the regulations.

(2) The Scottish Ministers may in the regulations make such incidental or transitional provision as they consider appropriate.

Proceedings under EC insolvency proceedings regulation: modified definition of “estate”

231

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Crown application

232

This Act binds the Crown as creditor only.

Re-enactment

233

Schedule 7, derived from Part 2 of schedule 7 of the Bankruptcy (Scotland) Act 1985 (and re-enacting sections 10 and 189 of the Bankruptcy (Scotland) Act 1913), has effect.

Modifications, repeals, savings, revocations and transitional provisions

234

(1) Schedule 8 makes provision for the modification of enactments.

(2) The enactments mentioned in schedule 9 are repealed, or as the case may be revoked, to the extent mentioned in the second column of that schedule.

(3) Nothing in this Act affects—

(a) any of the enactments repealed, revoked or amended by this Act in the enactment's operation in relation to—

(i) a sequestration as regards which the petition was presented, or the debtor application was made before, or

(ii) a trust deed executed before,

the coming into force of this Act, or

(b) any power to repeal, revoke or amend any such enactment, in so far as the power relates to such operation of the enactment.

(4) The apparent insolvency of a debtor may be constituted for the purposes of this Act even though the circumstance founded on for such constitution occurred on a date before the coming into force of this Act; and for those purposes the apparent insolvency is taken to have been constituted on the date in question.

(5) If a debtor whose estate is sequestrated after the coming into force of this Act is liable, by virtue of a transaction entered into before the date on which section 102 of the Bankruptcy (Scotland) Act 1913 was repealed, to pay royalties or a share of the profits to any person in respect of copyright, or interest in copyright, comprised in the sequestrated estate, then that section applies in relation to the trustee in the sequestration as it applied, before its repeal, in relation to any trustee in bankruptcy (within the meaning of that Act).

(6) Where sequestration of a debtor's estate is awarded under this Act a person—

(a) does not commit an offence under any provision of this Act in respect of anything done before the date of commencement of that provision, but

(b) instead commits an offence under the Bankruptcy (Scotland) Act 1985 (or as the case may be under the Bankruptcy (Scotland) Act 1913) in respect of anything so done which would have been an offence under that Act if the award of sequestration had been made under that Act.

(7) Unless the context otherwise requires, any reference in any enactment or document—

(a) to notour bankruptcy, or to a person being notour bankrupt, is to be construed as a reference to apparent insolvency, or to a person being apparently insolvent, within the meaning of section 16 of this Act,

(b) to a person's estate being sequestrated under the Bankruptcy (Scotland) Act 1913 or the Bankruptcy (Scotland) Act 1985 is to be construed as, or as including, a reference to its being sequestrated under this Act, and

(c) to a trustee in sequestration or to a trustee in bankruptcy, is to be construed as a reference to a trustee in a sequestration within the meaning of this Act,

(analogous references being construed accordingly).

(8) Unless the context otherwise requires, any reference in any enactment or document—

(a) to a “gratuitous alienation” is to be construed as including a reference to an alienation challengeable under section 98(2), or

(b) to a “fraudulent preference” or to an “unfair preference” is to be construed as including a reference to an unfair preference within the meaning of this Act.

Continuity of the law

235

(1) The repeal and re-enactment of a provision by this Act does not affect the continuity of the law.

(2) Anything done, or having effect as if done, under (or for the purposes of or in reliance on) a provision repealed by this Act, being a provision in force or effective immediately before the coming into force of this Act, has effect after that coming into force as if done under (or for the purposes of or in reliance on) the corresponding provision of this Act.

(3) Any reference (express or implied) in this Act or in any other enactment or document to a provision of this Act is to be construed, so far as the context permits, as including, as respects times, circumstances or purposes in relation to which the corresponding repealed provision had effect, a reference to that corresponding provision.

(4) Any reference (express or implied) in any enactment or document to a provision repealed by this Act is to be construed, so far as the context permits, as including, as respects times, circumstances or purposes in relation to which the corresponding provision of this Act has effect, a reference to that corresponding provision.

(5) Subsections (1) to (4) have effect in place of section 19(3) to (5) of the Interpretation and Legislative Reform (Scotland) Act 2010 (effect of repeal and re-enactment); but nothing in this section affects any other provision of that Act.

(6) This section is without prejudice to section 234(3) and to any specific transitional provision or saving contained in this Act.

(7) References in this section to this Act include subordinate legislation made under or by virtue of this Act.

Sequestrations to which this Act applies

236

This Act applies to sequestrations as regards which the petition is presented, or the debtor application is made on or after the day on which this section comes into force.

Commencement

237

(1) This section and sections 225, 226, 228 to 230 and 238 come into force on the day after Royal Assent.

(2) The remaining provisions of this Act come into force on such day as the Scottish Ministers may by regulations appoint.

(3) Different days may, under subsection (2), be appointed for different purposes and for different provisions.

Short title

238

The short title of this Act is the Bankruptcy (Scotland) Act 2016.

SCHEDULE 1

Modification of certain provisions of Act

1

(1) Where section 2(2) applies in relation to a debtor, this Act applies subject to the modifications mentioned in sub-paragraphs (2) to (6).

(2) Section 42 applies as if for subsection (1) there were substituted—

(1) This section applies where AiB receives by virtue of section 8(3)(a) the statement of assets and liabilities in relation to a debtor to whom section 2(2) applies. (1A) As soon as practicable, AiB must prepare a statement of the debtor's affairs, so far as within the knowledge of AiB, stating that, because 2(2) applies in relation to the debtor, no claims may be submitted by creditors under section 46 or 122. (1B) AiB must send a copy of the statement prepared under subsection (1A) to every known creditor of the debtor.

(3) Section 50(1) applies as if paragraphs (e) and (f) were omitted.

(4) Section 116 applies as if for subsection (2) there were substituted—

(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.

(5) Section 151 applies as if—

(a) subsections (2) to (6) and (9)(a) were omitted, and

(b) for subsection (7) there were substituted—

(7) The debtor or any creditor may, within 14 days beginning with the day on which the debtor is discharged under section 140(1), appeal to the sheriff against the discharge of AiB in respect of AiB's actings as trustee.

(6) Sections 44, 46, 48, 49, 60, 63 to 65, 122, 131 and 210(3) do not apply.

Accountant in Bankruptcy’s duty to consider whether paragraph 1 should cease to have effect

2

(1) This paragraph applies where paragraph 1 applies in relation to a debtor.

(2) If AiB considers that the circumstances mentioned in any of sub-paragraphs (3) to (6) apply in relation to the debtor, AiB must consider whether paragraph 1 should cease to have effect in relation to the debtor.

(3) The circumstances are that—

(a) AiB becomes aware the debtor application submitted under section 2 contains an error, and

(b) the nature of the error is such that the debtor was not at the time of application a debtor to whom section 2(2) applies.

(4) The circumstances are that—

(a) AiB becomes aware that the debtor application submitted under section 2 deliberately misrepresents, or fails to state, a fact that was the case at the time of application, and

(b) the nature of the misrepresentation or the omission of the fact is such that the debtor was not at that time a debtor to whom section 2(2) applies.

(5) The circumstances are that, at any time after the date on which the debtor application is made—

(a) the total value of the debtor's assets (leaving out of account any liabilities and any assets that, under section 88(1), would not vest in a trustee) exceeds £5,000 or such other sum as may be prescribed, or

(b) AiB assesses the debtor, under the common financial tool, as being able to make a contribution.

(6) The circumstances are that, at any time after the date of sequestration—

(a) AiB is not satisfied that the debtor has co-operated with the trustee, and

(b) AiB considers that if paragraph 1 were to cease to have effect it would be—

(i) of financial benefit to the estate of the debtor, and

(ii) in the interests of the creditors.

(7) The Scottish Ministers may by regulations modify this paragraph—

(a) by modifying the circumstances in which paragraph 1 ceases to have effect,

(b) in consequence of any modification made under sub-paragraph (7)(a).

Procedure where Accountant in Bankruptcy considers paragraph 1 should cease to have effect

3

(1) If AiB considers under paragraph 2(2) that paragraph 1 should cease to have effect in relation to a debtor, AiB must notify the debtor of that fact and of the matters mentioned in sub-paragraph (2).

(2) The matters are—

(a) the circumstances mentioned in paragraph 2 which AiB considers apply in relation to the debtor, and

(b) that the debtor may make representations to AiB within 14 days beginning with the giving of notification under sub-paragraph (1).

(3) On the expiry of the 14 days mentioned in sub-paragraph (2)(b) and after having taken into account any representations made by the debtor under that sub-paragraph, AIB must decide whether paragraph 1 should cease to have effect in relation to the debtor.

(4) If AiB decides that paragraph 1 should cease to have effect in relation to the debtor, AiB must, as soon as practicable after reaching that decision, give notice in writing to the debtor—

(a) of the decision, and

(b) of the effect of the decision.

Debtor’s right of appeal against decision under paragraph 3

4

(1) This paragraph applies where AiB gives notice to a debtor under paragraph 3(4).

(2) The debtor may appeal to the sheriff against the decision.

(3) Any such appeal must be lodged within 14 days after the day on which the notice is given.

(4) If the sheriff grants the appeal, paragraph 1 continues to have effect in relation to the debtor.

(5) If the sheriff refuses the appeal, or if it is abandoned or withdrawn, paragraph 1 ceases to have effect in relation to the debtor.

Decision that paragraph 1 ceases to have effect: modification of certain provisions of Act

5

(1) Where paragraph 1 ceases to have effect in relation to a debtor, this Act applies subject to sub-paragraphs (2) to (4).

(2) The debtor must send to the trustee a statement of assets and liabilities—

(a) where no appeal is taken under paragraph 4, within 7 days beginning with the expiry of the period during which an appeal may be made under that paragraph, or

(b) where an appeal is refused or, as the case may be, abandoned or withdrawn, within 7 days beginning with—

(i) the day on which notice is given of the outcome of the appeal, or

(ii) as the case may be, its abandonment or withdrawal.

(3) Section 44 applies as if, in subsection (3)(a), for the words “sequestration is awarded” there were substituted “ paragraph 1 of schedule 1 ceases to have effect in relation to the debtor ”.

(4) Section 116 applies as if for subsection (2) there were substituted—

(2) The trustee in the sequestration must require the debtor to give an account in writing, in such form as may be prescribed, of the debtor's current state of affairs— (a) within 60 days beginning with the day on which paragraph 1 of schedule 1 ceases to have effect in relation to the debtor, (b) on the expiry of 6 months beginning with the day on which the account is given under paragraph (a), and (c) on the expiry of each subsequent 6 months.

SCHEDULE 2

Amount which may be claimed generally

1

(1) Subject to the provisions of this schedule, the amount in respect of which a creditor is entitled to claim is the accumulated sum of principal and any interest which is due on the debt as at the date of sequestration.

(2) If a debt does not depend on a contingency but would not be payable but for the sequestration until after the date of the sequestration, the amount of the claim must be calculated as if the debt were payable on that date but subject to the deduction of interest at the rate specified in section 129(10) from that date until the date for payment of the debt.

(3) In calculating the amount of a creditor's claim, the creditor must deduct any discount (other than any discount for payment in cash) which is allowable by contract or course of dealing between the creditor and the debtor or by the usage of trade.

Claims for aliment and for periodical allowance on divorce or on dissolution of civil partnership

2

(1) A person entitled to aliment, however arising, from a living debtor as at the date of sequestration, or from a deceased debtor immediately before the debtor's death, is not entitled to include in the amount of the person's claim—

(a) any unpaid aliment for any period before the date of sequestration unless the amount of the aliment has been quantified by court decree or by any legally binding obligation which is supported by evidence in writing, and—

(i) in the case of spouses (or, where the aliment is payable to a divorced person in respect of a child, former spouses), or

(ii) in the case of civil partners (or, where the aliment is payable to a former civil partner in respect of a child after dissolution of a civil partnership, former civil partners),

they were living apart during that period, or

(b) any aliment for a period after the date of sequestration.

(2) Sub-paragraph (1) applies to a periodical allowance payable on divorce or on dissolution of a civil partnership—

(a) by virtue of a court order, or

(b) under any legally binding obligation which is supported by evidence in writing,

as it applies to aliment and as if, for sub-paragraphs (i) and (ii) of sub-paragraph (1)(a) and the word “they” which immediately follows sub-paragraph (ii), there were substituted “the payer and payee”.

Debts depending on contingency

3

(1) The amount which a creditor is entitled to claim does not include a debt in so far as its existence or amount depend on a contingency.

(2) But sub-paragraph (1) is subject to sub-paragraph (3).

(3) On an application by the creditor—

(a) to the trustee in the sequestration, or

(b) if there is no trustee, to AiB,

the trustee, or AiB, must put a value on the debt in so far as it is contingent.

(4) The amount in respect of which the creditor is then entitled to claim is that value but no more.

(5) And where the contingent debt is an annuity, a cautioner may not then be sued for more than that value.

(6) An interested person may apply to AiB for a review of a valuation under sub-paragraph (3) by the trustee.

(7) Any application under sub-paragraph (6) must be made within 14 days beginning with the day of the valuation.

(8) If an application under sub-paragraph (6) 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 vary the valuation within 28 days beginning with that day.

(9) An interested person may appeal to the sheriff against a decision by AiB under sub-paragraph (8)(b) within 14 days beginning with the day of the decision.

(10) AiB may refer a case to the sheriff for a direction before making a decision under sub-paragraph (8)(b).

(11) An appeal to the sheriff under sub-paragraph (9) may not be made in relation to a matter on which AiB has applied for a direction under sub-paragraph (10).

Secured debts

4

(1) A secured creditor, in calculating the amount of the secured creditor's claim, must deduct the value of any security as estimated by the secured creditor.

(2) But if the secured creditor surrenders, or undertakes in writing to surrender, a security for the benefit of the debtor's estate, the secured creditor is not required to make a deduction of the value of that security.

(3) The trustee in the sequestration may, at any time after the expiry of 12 weeks after the date of sequestration, require the secured creditor, at the expense of the debtor's estate, to discharge the security or convey or assign it to the trustee on payment to the creditor of the value specified by the creditor.

(4) The amount in respect of which the creditor is then entitled to claim is any balance of the creditor's debt remaining after receipt of the payment.

(5) A creditor whose security has been realised, in calculating the amount of the creditor's claim, must deduct the amount (less the expenses of realisation) which the creditor has received, or is entitled to receive, from the realisation.

Valuation of claims against partners for debts of the partnership

5

(1) Where a creditor claims, in respect of a debt of a partnership, against the estate of one of its partners, the creditor must estimate the value of—

(a) the debt to the creditor from the firm's estate where that estate has not been sequestrated, or

(b) the creditor's claim against that estate where it has been sequestrated,

and deduct that value from the creditor's claim against the partner's estate.

(2) The amount in respect of which the creditor is entitled to claim on the partner's estate is the balance remaining after that deduction is made.

SCHEDULE 3

PART 1 — List of preferred debts

Contributions to occupational pension schemes etc.

1

Any sum which is owed by the debtor and is a sum to which schedule 4 of the Pension Schemes Act 1993 (contributions to occupational pension scheme and state scheme premiums) applies.

Remuneration of employees etc.

2

(1) So much of any amount which—

(a) is owed by the debtor to a person who is or has been an employee of the debtor, and

(b) is payable by way of remuneration in respect of the whole or any part of the 4 months which immediately precedes the relevant date,

as does not exceed the prescribed amount.

(2) An amount owed by way of accrued holiday remuneration, in respect of any period of employment before the relevant date, to a person whose employment by the debtor has been terminated (whether before, on or after that date).

(3) So much of any amount owed in respect of money advanced for the purpose as has been applied for the payment of a debt which, if it had not been paid, would have been a debt falling within sub-paragraph (1) or (2).

3

So much of any amount which—

(a) is ordered, whether before or after the relevant date, to be paid by the debtor under the Reserve Forces (Safeguard of Employment) Act 1985, and

(b) is so ordered in respect of a default made by the debtor before that date in the discharge of the debtor's obligations under that Act,

as does not exceed such amount as may be prescribed.

Levies on coal and steel production

4

Any sums due at the relevant date from the debtor in respect of—

(a) the levies on the production of coal and steel referred to in Articles 49 and 50 of the Treaty establishing the European Coal and Steel Community, or

(b) any surcharge for delay provided for in Article 50(3) of that Treaty and Article 6 of Decision 3/52 of the High Authority of that Community.

Debts owed to the Financial Services Compensation Scheme

5

Any debt owed by the debtor to the scheme manager of the Financial Services Compensation Scheme under section 215(2A) of the Financial Services and Markets Act 2000.

Deposits covered by Financial Services Compensation Scheme

6

So much of any amount owed at the relevant date by the debtor in respect of an eligible deposit as does not exceed the compensation that would be payable in respect of the deposit under the Financial Services Compensation Scheme to the person or persons to whom the amount is owed.

Other deposits

7

So much of any amount owed at the relevant date by the debtor to one or more eligible persons in respect of an eligible deposit as exceeds any compensation that would be payable in respect of the deposit under the Financial Services Compensation Scheme to that person or those persons.

8

An amount owed at the relevant date by the debtor to one or more eligible persons in respect of a deposit which—

(a) was made through a non-UK branch of a credit institution authorised by the competent authority of the United Kingdom, and

(b) would have been an eligible deposit if it had been made through a UK branch of that credit institution.

PART 2 — Interpretation of Part 1

Meaning of “the relevant date”

9

In Part 1, “the relevant date” means—

(a) in relation to a debtor other than a deceased debtor, the date of sequestration, and

(b) in relation to a deceased debtor, the date of death.

Amounts payable by way of remuneration

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(1) For the purposes of paragraph 2, a sum is payable by the debtor to a person by way of remuneration in respect of any period if—

(a) it is paid as wages or salary (whether payable for time or for piece work or earned wholly or partly by way of commission) in respect of services rendered to the debtor in that period, or

(b) it is an amount falling within sub-paragraph (2) and is payable by the debtor in respect of that period.

(2) An amount falls within this sub-paragraph if it is—

(a) a guarantee payment under section 28(1) to (3) of the Employment Rights Act 1996 (entitlement to payment for workless day),

(b) a payment for time off under section 53(1) (looking for new employment or making arrangements for training for future employment) or 56(1) (antenatal care) of that Act,

(d) a payment for time off under section 169(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (trade union duties), or

(e) remuneration under a protective award made by an employment tribunal under section 189 of that Act (redundancy dismissal with compensation).

(3) For the purposes of paragraph 2(2), holiday remuneration is deemed, in the case of a person (“P”) whose employment has been terminated by or in consequence of the award of sequestration of P's employer's estate, to have accrued to P in respect of a period of employment if, by virtue of P's contract of employment or of any enactment, that remuneration would have accrued in respect of that period if P's employment had continued until P became entitled to be allowed the holiday.

(4) In sub-paragraph (3), “enactment” includes an order made or direction given under an enactment.

(5) Without prejudice to the preceding provisions of this paragraph—

(a) any remuneration payable by the debtor to a person in respect of a period—

(i) of holiday, or

(ii) of absence from work through sickness or other good cause,

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