News
The Accountant
in Bankruptcy is moving from Edinburgh to Ayrshire
by the end of 2005. The move is expected
to give a much needed job boost to the area.
The
insolvency regime for England and
Wales (and also for Scotland for
Company Director Disqualification
and Insolvency Practitioners Regulation)
is based on the Insolvency Act (1986)
and the Company Directors Disqualification
Act (1986). Also applicable to Scotland
is the Bankruptcy (Scotland) Act
1985.
Personal
Insolvency Procedures
SEQUESTRATION (BANKRUPTCY)
Sequestration may be
awarded against the estates of an individual,
a partnership,
a limited partnership, a body corporate
or an unincorporated body (e.g. a club).
A debtor's estate includes heritable
and moveable property, money due to the
debtor, the right to receive money or
goods at some time in the future and
any surplus income during the period
of the sequestration. The trustee is
required to ingather and realise the
estate and distribute the proceeds among
the creditors after deduction of the
fees and expenses. The debtor is required
to co-operate with the trustee at all
times and is automatically discharged
of his debts after 3 years, although
this can be deferred by the court in
certain circumstances. The trustee applies
to the Accountant in Bankruptcy for discharge
after the estate has been wound up. A
permanent record of the process – the
sederunt book - is maintained by the
permanent trustee and is available for
inspection at all reasonable hours by
any interested person.
Corporate
Insolvency Procedures Corporate
insolvency applies to registered companies,
limited liability partnerships or friendly
and provident societies. The 3 main forms
of insolvency are liquidation, administration
and receivership. The procedures in each
are quite distinct and are detailed in
the Insolvency Act 1986 and associated
legislation. Prior to devolution, the
Accountant in Bankruptcy had no involvement
in corporate insolvency but now has a
responsibility to enter details of receiverships
and liquidations of Scottish registered
companies and friendly and provident
societies in the register of insolvencies
and to receive certain returns and reports
from receivers and liquidators. The Accountant
in Bankruptcy has no statutory duty to
supervise the process of corporate insolvency
nor to monitor the general conduct of
the insolvency practitioners who are
appointed as receivers or liquidators.
Role
played by Government
The main statutory functions of the
Accountant in Bankruptcy are to:
(i) Generally supervise the process
of sequestration in Scotland and to ensure
that those involved in that process,
principally trustees and commissioners,
properly carry out their responsibilities,
and to take appropriate action when they
fail to do so.
(ii) Maintain a public register of sequestrations,
protected trust deeds and company insolvencies.
(iii) Undertake the functions of commissioners
in sequestrations where none may be,
or are, elected.
(iv) Act as interim and permanent trustee
in sequestrations where no insolvency
practitioner is appointed or elected
to do so.
The Accountant also has responsibility
for administering the Government's policies
in respect of personal insolvency and
the process of corporate insolvency in
Scotland and to monitor the implementation
of these policies.
Role
played by private sector practitioners
As well as administering sequestrations
on behalf of the Accountant in Bankruptcy,
insolvency practitioners are appointed
as trustees in their own right in approximately
10% of sequestrations. Role
played by the Court
The Court of Session (the highest
Civil Court in Scotland) and the Sheriff
Courts may award sequestration on the
petition of a creditor or the debtor.
The Sheriff Courts also determine issues
and consider incidental applications
and appeals brought by trustees and
other interested persons.
Does
the insolvency system in the UK
- Scotland allow
for:
1.
|
Different
procedures for the insolvency of individuals
and the insolvency of companies? |
|
 |
2.
|
Creditors
to accept an arrangement outside of formal
bankruptcy/liquidation proceedings? |
|
|
3.
|
Priority
payment for employee creditors? |
|
|
4.
|
Priority
payment for taxation debts? |
|
|
5.
|
Automatic
disqualification of directors of failed companies
from managing other companies? |
|
|
6.
|
Recognition
of insolvency proceedings being conducted
in another jurisdiction? |
|
|
7.
|
A
government agency to undertake insolvency
administration work? |
|
|
8.
|
Some
form of licensing of private sector practitioners? |
|
|
9.
|
A
review of the remuneration claimed by an
insolvency practitioner by either a court
or other government regulator? |
|
|
10.
|
A
mandatory scale of fees applicable to insolvency
practitioner remuneration? |
|
|
11.
|
Surveillance
of the work of private sector practitioners
by a government regulator? |
|
|
12.
|
Collation
of insolvency statistics by a government
regulator? |
|
|
|
