BANKING LITIGATION FEB 2007

In this eNewsletter:



Banking Contacts



Ruari MacNeill 

Direct Dial:
0131 625 7279

Email:
ruari.macneill
@andersonstrathern.co.uk  



Claire Martin  

Direct Dial:
0131 625 7285

Email:
claire.martin
@andersonstrathern.co.uk


Where are we?

1 Rutland Court,
Edinburgh, EH3 8EY
t: 0131 270 7700
f: 0131 270 7788

24 Blythswood Square
Glasgow, G2 4BG
t: 0141 242 6060
f: 0141 221 4733

14 Court Street
Haddington, EH41 3JA
t: 01620 82 2127
f: 01620 82 5839

163 Lanark Road West
Currie, EH14 5NZ
t: 0131 449 2833
f: 0131 449 6725

Contact information and maps of all Anderson Strathern offices

 

BANKRUPTCY & DILIGENCE (SCOTLAND) ACT 2007
BANKRUPTCY & NOTE

NOTE

A commencement order* was issued on 18th February, which has brought into force sections 20 (modification of provisions relating to protected trust deeds) and 35 (certain regulations under the 1985 Act: procedure).  These sections simply accord the Scottish Ministers power to make regulations relating to the subject matter described, and do not merit analysis here.

The commencement orders required to bring the remainder of Part 1, and Parts 6, 7, 9 and 12 and section 208 of the 2007 Act are not yet publicly available. It is possible that certain, as yet undefined, sections in those may not be enacted in whole or in part as at 1 April. It is anticipated that a Commencement Order (No 3) will be published in the near future.

* Bankruptcy & Diligence etc (Scotland) Act 2007 (Commencement No 2 and Savings) Order 2008 [SSI 2008/45]

PART1 - BANKRUPTCY

Automatic Discharge

Debtors will now be automatically discharged after 1 year (as opposed to the current 3 year period).

Debt Threshold

Debt lower limit increased to £3000 from the current limit of £1500. 

Creditor must have served a Debt Advice and Information Pack before petition can be raised.

Jurisdiction

Petition and recalls may only be raised in the Sheriff Court. 

Debtor applications must be made to the AiB and not the Court.

Abolition of requirement for Trustees to live within the jurisdiction of the Court of Session.

Continuations

Court will be able to continue the hearing of the petition for all relevant debt within 42 days.  Court may continue the petition without limit where it is satisfied that a Debt Payment Plan has or will be applied for.

Bankruptcy Restriction Orders (BRO)

An application for a BRO can be made by the AiB to the Sheriff Court within the 1 year period following the award of sequestration but before discharge.

BROs apply only to natural persons and not partnerships etc.

Their effect will be to impose certain restrictions on the bankrupt for a period of between 2-15 years. 

Grounds for making BRO include failure to keep records, making gratuitous alienations or unfair preferences and trading at a time or incurring debts when the debtor knew that he could not pay his debts and/or if the debtor has previously been sequestrated. 

 

Bankruptcy Restriction Undertaking (BRU)

Has the same force and effect as a BRO.

Enables the debtor to avoid court involvement by offering to the AiB a BRU following notification of its intention to apply for a BRO. 

The AiB and not the Court considers the terms of the offer.

Can last for 2-15 years. 

If the debtor fails to comply with the terms of a BRU, the AiB can apply to the Sheriff Court for a BRO.

Family Home

Heritable property to automatically re-vest in debtor after 3 years unless Trustee has:-

Disposed of the property, concluded missives for its sale, registered a notice of title, commenced proceedings for authority to sell the property, for the division and sale or for the vacant possession of the property or has reached a contrary agreement with the debtor or sent a statutory memorandum to the Keeper.

Inheritance

Automatic re-vesting upon discharge of any interest the debtor has under a will together with any interest in their parents' or spouse's estate.

Income Payment Orders

Requires the debtor to pay to the Trustee a proportion of his income after the award of sequestration.

Must be applied for before discharge.

May run for a maximum of 3 years.

Under the IPO a third party, such as an employer, may be required to pay a proportion of the debtor's income to the Trustee.

Debtor Applications

Now to be made to the AiB and not the Sheriff Court.

Introduction of low income, low asset debtor applications.  A debtor must satisfy the following criteria before he can make such an application:-

  • The debtor weekly income must not exceed £100
  • The debtor does not own any land
  • The total value of the debtor's estate (leaving out of account any liabilities) on the date of his application is made does not exceed £1000.

Trust Deeds

The Scottish Ministers are given powers to regulate Trust Deeds.  AiB to be given power to audit the intromissions of any trustee and trustees of Protected Trust Deeds are now subject to the supervision of the AiB.

Further information

For further information on this ezine or any other banking litigation related issue, please contact Ruari MacNeill 0131 625 7279 or Claire Martin 0131 625 7285 in the Dispute Resolution Banking Team.


 

You have received this e-newsletter as you signed up to receive updates from www.andersonstrathern.co.uk
Click here to unsubscribe. Copyright 2004-2007 Anderson Strathern LLP. All rights reserved. Anderson Strathern LLP is a limited liability partnership registered in Scotland with Partnership No. SO301485. Registered office: 1 Rutland Court, Edinburgh EH3 8EY. 'Partner' denotes a member of, and all business is transacted for and on behalf of, Anderson Strathern LLP. A list of members' names is open to inspection at each of our offices. This article represents the law and best advice at the date of publication but the law can change very quickly and you are advised to contact us for up to the minute advice.