Bankruptcy and Diligence etc. (Scotland) Act 2007

Part 1 — Bankruptcy

Duration of bankruptcy

Measure of damages payable by judicial officer for negligence or other fault

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Bankruptcy restrictions orders and undertakings

Expenses of inhibition

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Effect of bankruptcy restrictions orders and undertakings

Disqualification from being appointed as receiver

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• (1) Section 51 of the Insolvency Act 1986 (c. 45) (appointment of receiver) is amended as follows.

• (2) In subsection (3), after paragraph (b), insert—

(ba) a person subject to a bankruptcy restrictions order;

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• (3) In subsection (5), after “bankrupt” insert “or a person subject to a bankruptcy restrictions order”.

• (4) In subsection (6), after “receivers” insert

; and “bankruptcy restrictions order” means— (a) a bankruptcy restrictions order made under section 56A of the Bankruptcy (Scotland) Act 1985 (c. 66); (b) a bankruptcy restrictions undertaking entered into under section 56G of that Act; (c) a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to this Act; or (d) a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule.

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Disqualification for nomination, election and holding office as member of local authority

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In section 31 of the Local Government (Scotland) Act 1973 (c. 65) (disqualifications for nomination, election and holding office as member of local authority)—

• (a) after subsection (1)(b), insert—

(ba) he is subject to a bankruptcy restrictions order;

; and

• (b) after subsection (3A), insert—

(3B) In subsection (1)(ba) above, “bankruptcy restrictions order” means— (a) a bankruptcy restrictions order made under section 56A of the Bankruptcy (Scotland) Act 1985; (b) a bankruptcy restrictions undertaking entered into under section 56G of that Act; (c) a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to the Insolvency Act 1986 (c. 45); or (d) a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule.

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Orders relating to disqualification

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The trustee in the sequestration

Amalgamation of offices of interim trustee and permanent trustee

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Repeal of trustee’s residence requirement

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Duties of trustee

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Grounds for resignation or removal of trustee

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Termination of interim trustee’s functions

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Statutory meeting and election of trustee

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Replacement of trustee acting in more than one sequestration

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Requirement to hold money in interest bearing account

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Debtor applications

Debtor applications

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Debtor applications by low income, low asset debtors

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Jurisdiction

Sequestration proceedings to be competent only before sheriff

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Vesting of estate and dealings of debtor

Vesting of estate and dealings of debtor

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Income received by debtor after sequestration

Income received by debtor after sequestration

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Debtor's home and other heritable property

Debtor’s home and other heritable property

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Protected trust deeds

Modification of provisions relating to protected trust deeds

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Modification of composition procedure

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Status and powers of Accountant in Bankruptcy

Status of Accountant in Bankruptcy as officer of the court

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Accountant in Bankruptcy’s power to investigate trustees under protected trust deeds

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Offences

Modification of offences under section 67 of the 1985 Act

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Miscellaneous and general

Debt limits in sequestrations

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Creditor to provide debt advice and information package

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Continuation of sequestration proceedings

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Abolition of summary administration

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Non-vested contingent interest reinvested in debtor

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Debtor’s requirement to give account of state of affairs

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Restriction of debtor’s right to appeal under sections 49(6) and 53(6) of the 1985 Act

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Status of order on petition to convert protected trust deed into sequestration

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Power to provide for lay representation in sequestration proceedings

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In section 32(1) of the Sheriff Courts (Scotland) Act 1971 (c. 58) (power of Court of Session to regulate civil procedure in sheriff court), after paragraph (l) insert—

(m) permitting a debtor appearing before a sheriff under section 12 of the Bankruptcy (Scotland) Act 1985 (c. 66) (award of sequestration) to be represented, in such circumstances as may be specified in the act of sederunt, by a person who is neither an advocate nor a solicitor.

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Treatment of student loans on sequestration

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• (1) In section 73B(12) of the Education (Scotland) Act 1980 (c. 44) (power to make provision in relation to treatment of student loans upon discharge under the 1985 Act), after “receive,” insert “before, on or”.

• (2) In paragraph 6 of Schedule 2 to the Education (Student Loans) Act 1990 (c. 6) (treatment of student loans on sequestration), which, notwithstanding its repeal by section 44 of and Schedule 4 to the Teaching and Higher Education Act 1998 (c. 30), is saved by virtue of article 3 of the Teaching and Higher Education Act 1998 (Commencement No. 2 and Transitional Provisions) Order 1998 (S.I. 1998 No. 2004)—

• (a) after “Where,” insert “before, on or”; and

• (b) after “before” insert “, on”.

Certain regulations under the 1985 Act: procedure

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Minor and consequential amendments of the 1985 Act

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Part 2 — Floating charges

Registration and creation etc.

Register of Floating Charges

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• (1) The Keeper of the Registers of Scotland (in this Part, the “Keeper”) must establish and maintain a register to be known as the Register of Floating Charges.

• (2) The Keeper must accept an application for registration of—

• (a) any document delivered to the Keeper in pursuance of section 38, 41, 42, 43 or 44 of this Act; and

• (b) any notice delivered to the Keeper in pursuance of section 39 or 45(2) of this Act,

provided that the application is accompanied by such information as the Keeper may require for the purposes of the registration.

• (3) On receipt of such an application, the Keeper must note the date of receipt of the application; and, where the application is accepted by the Keeper, that date is to be treated for the purposes of this Part as the date of registration of the document or notice to which the application relates.

• (4) The Keeper must, after accepting such an application, complete registration by registering in the Register of Floating Charges the document or notice to which the application relates.

• (5) The Keeper must—

• (a) make the Register of Floating Charges available for public inspection at all reasonable times;

• (b) provide facilities for members of the public to obtain copies of the documents in the Register; and

• (c) supply an extract of a document in the Register, certified as a true copy of the original, to any person requesting it.

• (6) An extract certified as mentioned in subsection (5)(c) above is sufficient evidence of the original.

• (7) The Keeper may charge such fees—

• (a) for registering a document or notice in the Register of Floating Charges; or

• (b) in relation to anything done under subsection (5) above,

as the Scottish Ministers may by regulations prescribe.

• (8) The Scottish Ministers may by regulations make provision as to—

• (a) the form and manner in which the Register of Floating Charges is to be maintained;

• (b) the form of documents (including notices as mentioned in sections 39(1) and 45(2) of this Act) for registration in that Register, the particulars they are to contain and the manner in which they are to be delivered to the Keeper.

• (9) Provision under subsection (8) above may, in particular, facilitate the use—

• (a) of electronic communication;

• (b) of documents in electronic form (and of certified electronic signatures in documents).

Creation of floating charges

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• (1) It continues to be competent, for the purpose of securing any obligation to which this subsection applies, for a company to grant in favour of the creditor in the obligation a charge (known as a “floating charge”) over all or any part of the property which may from time to time be comprised in the company's property and undertaking.

• (2) Subsection (1) above applies to any debt or other obligation incurred or to be incurred by, or binding upon, the company or any other person.

• (3) From the coming into force of this section, a floating charge is (subject to subsection (3A) and section 39 of this Act) created only when a document—

• (a) granting a floating charge; and

• (b) subscribed by the company granting the charge,

is registered in the Register of Floating Charges.

• (3A) If a floating charge is granted in favour of a central institution, it is created only when the document granting the floating charge is executed by the company granting the charge.

• (4) References in this Part to a document which grants a floating charge are to a document by means of which a floating charge is granted.

Advance notice of floating charges

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• (1) Where a company proposes to grant a floating charge, the company and the person in whose favour the charge is to be granted may apply to have joint notice of the proposed charge registered in the Register of Floating Charges.

• (2) Subsection (3) below applies where—

• (a) a notice under subsection (1) above is registered in the Register of Floating Charges; and

• (b) within 21 days of the notice being so registered, a document—

• (i) granting a floating charge conforming with the particulars contained in the notice; and

• (ii) subscribed by the company granting the charge,

is registered in the Register of Floating Charges.

• (3) Where this subsection applies, the floating charge so created is to be treated as having been created when the notice under subsection (1) above was so registered.

• (4) This section does not apply where a company proposes to grant a floating charge in favour of a central institution.

Ranking of floating charges

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• (1) Subject to subsections (4) and (5) below, a floating charge—

• (a) created on or after the coming into force of this section; and

• (b) which has attached to all or any part of the property of a company,

ranks as described in subsection (2) below.

• (2) The floating charge referred to in subsection (1) above—

• (a) ranks with—

• (i) any other floating charge which has attached to that property or any part of it; or

• (ii) any fixed security over that property or any part of it,

according to date of creation; and

• (b) ranks equally with any floating charge or fixed security referred to in paragraph (a) above which was created on the same date as the floating charge referred to in subsection (1) above.

• (3) For the purposes of subsection (2) above—

• (a) the date of creation of a fixed security is the date on which the right to the security was constituted as a real right; and

• (b) the date of creation of a floating charge subsisting before the coming into force of this section is the date on which the instrument creating the charge was executed by the company granting the charge.

• (4) Where all or any part of the property of a company is subject to both—

• (a) a floating charge; and

• (b) a fixed security arising by operation of law,

the fixed security has priority over the floating charge.

• (5) Where the holder of a floating charge over all or any part of the property of a company has received intimation in writing of the subsequent creation of—

• (a) another floating charge over the same property or any part of it; or

• (b) a fixed security over the same property or any part of it,

the priority of ranking of the first-mentioned charge is restricted to security for the matters referred to in subsection (6) below.

• (6) Those matters are—

• (a) the present debt incurred (whenever payable);

• (b) any future debt which, under the contract to which the charge relates, the holder is required to allow the debtor to incur;

• (c) any interest due or to become due on the debts referred to in paragraphs (a) and (b) above;

• (d) any expenses or outlays which may be reasonably incurred by the holder; and

• (e) in the case of a floating charge to secure a contingent liability (other than a liability arising under any further debts incurred from time to time), the maximum sum to which the contingent liability is capable of amounting, whether or not it is contractually limited.

• (7) Subsections (1) to (6) above, and any provision made under section 41(1) of this Act, are subject to sections 175 and 176A (provision for preferential debts and share of assets) of the Insolvency Act 1986 (c. 45).

Ranking clauses

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• (1) The document granting a floating charge over all or any part of the property of a company may make provision regulating the order in which the charge ranks with any other floating charge or any fixed security (including a future floating charge or fixed security) over that property or any part of it.

• (2) Provision under subsection (1) above—

• (a) may displace in whole or part—

• (i) subsections (1) and (2) of section 40 of this Act;

• (ii) subsections (5) and (6) of that section;

• (b) may not affect the operation of subsection (4) of that section (whether as against subsections (1) and (2) of that section or other provision under subsection (1) above).

• (3) Accordingly, subsections (1), (2), (5) and (6) of that section have effect subject to any provision made under subsection (1) above.

• (4) Provision under subsection (1) above is not valid unless it is made with the consent of the holder of any subsisting floating charge, or any subsisting fixed security, which would be adversely affected by the provision.

• (5) A document of consent for the purpose of subsection (4) above may be registered in the Register of Floating Charges.

Assignation of floating charges

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• (1) A floating charge may be assigned (and the rights under it vested in the assignee) by the registration in the Register of Floating Charges of a document of assignation subscribed by the holder of the charge.

• (2) An assignation under subsection (1) above may be in whole or to such extent as may be specified in the document of assignation.

• (3) This section is without prejudice to any other enactment, or any rule of law, by virtue of which a floating charge may be assigned.

• (4) This section does not apply where a floating charge is assigned (whether in whole or to a specified extent) to or by a central institution.

Alteration of floating charges

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• (1) A document of alteration may alter (whether by addition, deletion or substitution of text or otherwise) the terms of a document granting a floating charge.

• (2) If (and in so far as) an alteration to the terms of a document granting a floating charge concerns—

• (a) the ranking of the charge with any other floating charge or any fixed security; or

• (b) the specification of—

• (i) the property that is subject to the charge; or

• (ii) the obligations that are secured by the charge,

the alteration is not valid unless subsection (3) below is satisfied.

• (3) This subsection is satisfied if the alteration is made by a document of alteration which is—

• (a) subscribed by—

• (i) the company which granted the charge;

• (ii) the holder of the charge; and