Legalize / United Kingdom / Scotland / Act of the Scottish Parliament

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

[^key-f1b9dd876d980309b8268e9062b49904]: Words in s. 69(9) substituted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 9(2)(a), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-d76c4be7aa411e14fdb71961677b91ce]: S. 69(12) substituted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 9(2)(b), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-dcf419ada714bed13ed1379092178b4b]: Words in s. 76 inserted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 13(2), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-3baeead4a9cf45e272cfeaf179a33994]: S. 77(6A) inserted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 13(3), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-54e9ae5d0fda8681cb448eb42a6b7378]: Word in s. 98(7) substituted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 8(2), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-a2039d534e3066f647a7c3b188440460]: S. 134(6) inserted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 9(3)(c), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-d2315465b84ad9ebc82698e406830e32]: S. 134(3) substituted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 9(3)(a), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-608f3ebd6ac5ec0fbdffe8cc808eeadd]: Words in s. 134(4) inserted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 9(3)(b), 22(2); S.S.I. 2024/373, reg. 2 (with reg. 3)

[^key-2e137240d5e489684800fdbd0c432625]: S. 167(4)-(6) inserted (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 10(2)(b), 22(2); S.S.I. 2024/373, reg. 2 (with regs. 3, 4)

[^key-bdfbf57d8d86e8819230aa3c4a85c5ef]: S. 167(3)(b)(ba) substituted for s. 167(3)(b) (20.1.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 10(2)(a), 22(2); S.S.I. 2024/373, reg. 2 (with regs. 3, 4)

[^key-53f7b520c3920c336bb8071fc5657ee7]: Ss. 147A-147C and cross-heading inserted (17.4.2025 for specified purposes, 25.6.2025 in so far as not already in force) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 12(2), 22(2) (with s. 12(4)); S.S.I. 2025/107, reg. 2(1)(2)(d)

[^key-729daf32b427007e30760f9185b353f9]: S. 214(2)(qa) inserted (17.4.2025 for specified purposes, 25.6.2025 in so far as not already in force) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 12(3), 22(2); S.S.I. 2025/107, reg. 2(1)(2)(d)

[^key-5700d3423d41fb3907bbdad79f420847]: S. 32 heading substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(4)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-3cf65b88698df00606fcef9e5d444930]: S. 35 heading substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(f), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-d628174cfd5cb0d6860fabdbef9f80a0]: S. 37A inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(6), 22(2); S.S.I. 2025/107, reg. 2(2)(b) (with reg. 3)

[^key-d168a9a283a8918bd35998ce7cbb4dfa]: Words in s. 29(4)(a) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(2)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-136e391b25411efd8c937f0098443a59]: Word in s. 29(4)(b) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(2)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-c522a4260683f435e27df05838e9b27f]: Words in s. 29(4)(c) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(2)(c), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-0054263b28e364bbc73183d715953519]: Words in s. 29(4)(d) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(2)(d), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-8b58f0414b27a9acb4bbb4d37084268b]: Words in s. 30(2)(a) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(2)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-9e35d3697859b5a61d6381fef4670de7]: Words in s. 30(4)(a) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(2)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-9f924bc5c8425d84cad5caf9ca7e173a]: Word in s. 31(3) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(3)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-3e6e4d4e50f641fcfe9fc54e646fce93]: Words in s. 31(4)(a) repealed (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(3)(b)(i), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-ddcab9b0a41aa1fdd6c21bc0818c21d8]: Words in s. 31(4)(c) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(3)(b)(ii), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-2caedc87220dbfd2a2ebc123f43999bf]: S. 31(5)(a) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(3)(c)(i), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-2d77b69c7baa489c2583b579d1243758]: S. 31(5)(b) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(3)(c)(ii), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-0ae86112d1f03b14659ad3b8b99ee4ff]: S. 32(1) substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(4)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-cfac7e1141be50aa41d9f5e407b33fcc]: S. 32(4)(b)(i)(ii) substituted for words (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(3)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-7bf449e0a69ea8ddacd37d0f3882e373]: Words in s. 32(4)(c)(ii) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(3)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-665f0126a087af78a2f9ac9a7768b116]: Word in s. 33(1) repealed (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(5)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-e3b0610e0ef7d2746ba9d8fdd9445c11]: S. 33(1)(aa) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(5)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-f4997b14171753b053f736266cec5eeb]: S. 34(A1) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(6)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-acefd68b97bf1e5641a0574641eb5f6d]: S. 34(1A) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(6)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-c07e047465f2dc2cc160a65fc6ba0e9f]: Words in s. 34(2)(a) substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(6)(c), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-149a0cff92aae9157ece7cb48b6b2366]: S. 34 title substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(6)(d), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-4dc331e509e28ba7786758e321744930]: S. 34(1)(a)(i)(ii) substituted for words (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(4), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-a95e0e1f1abf0b10e58d13282f556c0c]: Words in s. 35(1)(b) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(a)(i), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-9c8c3de43c1d4593b29d37d1f5c869d8]: Word in s. 35(1)(b) substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(a)(ii), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-946b1b36ecde1848d13b1a5609e83c54]: S. 35(2)(a)(b) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-aa7d212845ac068815298b7676dce207]: S. 35(2A)(2B) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(c), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-60d4f02ebd639bc83ebf7ccb85df2d8e]: Words in s. 35(5)(a) substituted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(d), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-9616fe5495d2b438f7ed1640449b7cbe]: S. 35(6A)-(6C) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 4(7)(e), 22(2); S.S.I. 2025/107, reg. 2(2)(a) (with reg. 4)

[^key-593b8811119de8e0fe8ff8cce646f004]: Words in s. 35(1)(b) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(5)(a), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-2576193df0ae2097d064cb8eded708d6]: S. 35(6)(a)(i)(ii) substituted for words (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 5(5)(b), 22(2); S.S.I. 2025/107, reg. 2(2)(b)

[^key-1a6b70f8de3e2002173d28e561ce8c81]: Words in s. 142(6)(c) inserted (25.6.2025) by Bankruptcy and Diligence (Scotland) Act 2024 (asp 9), ss. 11(2), 22(2); S.S.I. 2025/107, reg. 2(2)(c)

14A

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14B

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3A

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173A

(1) An insolvency-related term of a contract for the supply of essential goods or services to a debtor ceases to have effect if—

(a) a trust deed granted by the debtor is granted protected status, and

(b) the supply is for the purpose of a business which is or has been carried on by or on behalf of the debtor.

(2) An insolvency-related term of a contract does not cease to have effect by virtue of subsection (1) to the extent that—

(a) it provides for the contract or the supply to terminate, or any other thing to take place, because the individual becomes subject to an insolvency procedure other than a trust deed,

(b) it entitles a supplier to terminate the contract or the supply, or do any other thing, because the individual becomes subject to an insolvency procedure other than a trust deed, or

(c) it entitles a supplier to terminate the contract or the supply because of an event that occurs, or may occur, after a trust deed granted by the debtor is granted protected status.

(3) Where an insolvency-related term of a contract ceases to have effect under this section the supplier may—

(a) terminate the contract, if the condition in subsection (4) is met,

(b) terminate the supply, if the condition in subsection (7) is met.

(4) The condition in this subsection is that—

(a) the trustee under the trust deed consents to the termination of the contract,

(b) on application by the supplier the court grants permission for the termination of the contract, or

(c) any charges in respect of the supply that are incurred after the date of protection of the trust deed are not paid within the period of 28 days beginning with the day on which payment is due.

(5) An application by the supplier under subsection (4)(b) is to be made to the sheriff who, had a petition for sequestration of the estate been presented at the date the trust deed was granted, would have had jurisdiction to hear that petition in terms of section 15(1) or (3).

(6) The court may grant permission under subsection (4)(b) only if satisfied that the continuation of the contract would cause the supplier hardship.

(7) The condition in this subsection is that—

(a) the supplier gives written notice to the trustee under the trust deed that the supply will be terminated unless the trustee personally guarantees the payment of any charges in respect of the continuation of the supply after the date of protection of the trust deed, and

(b) the trustee does not give that guarantee within the period of 14 days beginning with the day the notice is received.

(8) For the purposes of securing that the interests of suppliers are protected, where—

(a) an insolvency-related term of a contract (the “original term”) ceases to have effect by virtue of subsection (1), and

(b) a subsequent trust deed granted by the debtor is granted protected status,

the contract is treated for the purposes of subsections (1) to (7) as if, immediately before the subsequent trust deed granted by the debtor is granted protected status, it included an insolvency-related term identical to the original term.

(9) A contract for the supply of essential goods or services is a contract for a supply mentioned in section 222(4).

(10) An insolvency-related term of a contract for the supply of essential goods or services to a debtor is a provision of the contract under which—

(a) the contract or the supply would terminate, or any other thing would take place, because a trust deed granted by the debtor is granted protected status,

(b) the supplier would be entitled to terminate the contract or the supply, or to do any other thing, because a trust deed granted by the debtor is granted protected status, or

(c) the supplier would be entitled to terminate the contract or the supply because of an event that occurred before a trust deed granted by the debtor is granted protected status.

(11) Subsection (1) does not have effect in relation to a contract entered into before 1st August 2017.

129A

(1) In this Act, “secondary non-preferential debts” means non-preferential debts issued by a relevant financial institution under an instrument where—

(a) the original contractual maturity of the instrument is of at least one year,

(b) the instrument is not a derivative and contains no embedded derivative, and

(c) the relevant contractual documentation and where applicable the prospectus related to the issue of the debts explain the priority of the debts under this Act.

(2) In subsection (1)(b), “derivative” has the same meaning as in Article 2(5) of Regulation (EU) No 648/2012.

(3) For the purposes of subsection (1)(b) an instrument does not contain an embedded derivative merely because—

(a) it provides for a variable interest rate derived from a broadly used reference rate, or

(b) it is not denominated in the domestic currency of the person issuing the debt (provided that the principal, repayment and interest are denominated in the same currency).

(4) In this Act, “tertiary non-preferential debts” means all subordinated debts, including (but not limited to) debts under Common Equity Tier 1 instruments, Additional Tier 1 instruments and Tier 2 instruments (all within the meaning of Part 1 of the Banking Act 2009).

(5) In this section, “relevant financial institution” means any of the following—

(a) a credit institution,

(b) an investment firm,

(d) a mixed financial holding company,

(da) an investment holding company,

(e) a financial institution which is—

(i) a subsidiary of an entity referred to in paragraphs (a) to (da), and

(ii) covered by the supervision of that entity on a consolidated basis by the Financial Conduct Authority in accordance with Part 9C rules or by the Prudential Regulation Authority in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms or CRR rules, or,

(f) a mixed-activity holding company.

(6) The definitions in Article 4 of Regulation (EU) No. 575/2013 apply for the purposes of subsection (5) except for the definitions of “consolidated basis” and “consolidated situation”.

(7) For the purposes of subsection (5)—

“on a consolidated basis” means on the basis of the consolidated situation;

“consolidated situation” means the situation that results from an entity being treated, for the purposes of Part 9C rules, Regulation (EU) 575/2013 or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;

“CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 2000;

“Part 9C rules” has the meaning given in section 143F of the Financial Services and Markets Act 2000.

13A

Where a meeting is to be held in pursuance of paragraph 13(b), the references in paragraphs 4 and 6 to the place fixed for the holding of the meeting are to be read as references to the electronic means by which attendees are to be able to attend the meeting without being together in the same place.

Certain HMRC debts

8A

(1) Any amount owed at the relevant date by the debtor to the Commissioners in respect of—

(a) value added tax, or

(b) a relevant deduction.

(2) In sub-paragraph (1), the reference to “any amount” is subject to any regulations under section 99(1) of the Finance Act 2020.

(3) For the purposes of sub-paragraph (1)(b) a deduction is “relevant” if—

(a) the debtor is required, by virtue of an enactment, to make the deduction from a payment made to another person and to pay an amount to the Commissioners on account of the deduction,

(b) the payment to the Commissioners is credited against any liabilities of the other person, and

(4) In this paragraph “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.

224A

(1) Where a provision of this Act or of any regulations made under it authorises or requires a document to be served on a person (whether the expression “serve”, “give”, “send” or any other expression is used), the document may be served on the person—

(a) by being delivered personally to the person,

(b) by being sent to the proper address of the person—

(i) by a registered post service (as defined in section 125(1) of the Postal Services Act 2000), or

(ii) by a postal service which provides for the delivery of the document to be recorded, or

(2) For the purpose of subsection (1)(b), the proper address of a person is—

(a) in the case of a body corporate, the address of the registered or principal office of the body,

(b) in the case of a partnership, the address of the principal office of the partnership,

(3) Where a document is served as mentioned in subsection (1)(b) on an address in the United Kingdom it is to be taken to have been received 48 hours after it is sent unless the contrary is shown.

(4) For the purpose of subsection (1)(c)—

(a) electronic transmission of a document must be effected in a way that the recipient has indicated to the sender that the recipient is willing to receive the document,

(b) the recipient’s indication of willingness to receive a document in a particular way may be—

(i) specific to the document in question or generally applicable to documents of that kind,

(ii) expressed specifically to the sender or generally (for example on a website),

(iii) inferred from the recipient having previously been willing to receive documents from the sender in that way and not having indicated unwillingness to do so again,

(c) the sender’s uploading of a document to an electronic storage system from which the recipient is able to download the document may constitute electronic transmission of the document, where the recipient is sent a notification that the document has been uploaded in that way,

(d) a notice transmitted electronically is taken to have been received on the day of transmission unless the contrary is shown.

(5) This section does not apply where some other form of delivery is required by rules of court or by order of the court.

Removal of protected status where material error or irregularity

171A

(1) If, within 3 months of the trust deed being registered in the register of insolvencies under section 171(2), the trustee becomes aware that any of the conditions set out in sections 164, 165, 166(2) (where it applied) or 167 to 170 were not met at the point of registration due to a material error or irregularity, the trustee must notify AiB.

(2) Where AiB is notified under subsection (1), AiB must decide whether the trust deed should cease to have protected status (see section 163).

(3) If AiB decides under subsection (2) that the trust deed should cease to have protected status AiB must, as soon as reasonably practicable, notify the trustee and the debtor in writing of that decision.

(4) Where the trustee receives a notification under subsection (3) the trustee must, as soon as reasonably practicable, notify every creditor known to the trustee (other than any secured creditor who has, as mentioned in paragraph (b)(ii) of the trust deed definition, agreed not to claim under the trust deed for any of the debt in respect of which the security is held).

(5) A notice under subsection (3) or (4) must state—

(a) the fact that a decision under subsection (2) has been made,

(b) the date on which the decision was made, and

(6) Where a notice is issued under subsection (3)—

(a) the trust deed ceases to have protected status 14 days after that notice is given (but see section 171B), and

(b) AiB must, as soon as reasonably practicable, remove the entry for the trust deed in the register of insolvencies.

171B

(1) The debtor, the trustee or a creditor may apply to AiB for a review of its decision under section 171A(2).

(2) An application under subsection (1) must be made within 14 days beginning with the date that decision was notified under section 171A(3).

(3) If an application for review under subsection (1) is made, AiB’s decision under section 171A(2) is suspended until the determination of that review by AiB.

(4) If an application for a review under subsection (1) is made, AiB must—

(a) confirm or revoke the decision within 21 days beginning with the day on which the application is made, and

(b) notify the debtor, the trustee and (where relevant) the creditor who made the application under subsection (1) of the outcome.

(5) If, under subsection (4), AiB—

(a) confirms a decision, the decision takes effect 21 days after the day on which AiB notifies the debtor, the trustee and (where relevant) the creditor who made the application under subsection (1) of the outcome of its review,

(b) revokes a decision, the decision is of no effect.

(6) The trustee must, as soon as reasonably practicable following receipt of a notification under subsection (4), notify the outcome of the review to every creditor known to the trustee.

171C

A trust deed ceasing to have protected status by virtue of a decision under section 171A is not to—

(a) invalidate any acts of the trustee between the date the trust deed was registered and the date a decision under section 171A takes effect,

(b) prevent the trust deed from re-attaining protected status provided the conditions in sections 164-170, so far as applicable, are met, or

(i) making a debtor application under section 2 or, as the case may be, 6,

(ii) applying for a moratorium under section 195 or, as the case may be, 196,

(iii) applying for a debt payment programme within the meaning of section 2 of the 2002 Act.

184A

(1) If—

(a) the period for which payments are required under the trust deed has ended, and

(b) on request by the debtor, or where the trustee has not made a statement under section 184(2)(a) on the basis that the trustee considers that the debtor—

(i) has not met the debtor’s obligations in terms of the trust deed, or

(ii) has not co-operated with the administration of the trust,

the trustee must as soon as reasonably practicable apply to AiB for agreement to refuse to discharge the debtor from the trust deed.

(2) If—

(a) the period for which payments are required under the trust deed has not ended,

(b) on request by the debtor, or where the trustee is satisfied that the debtor—

(i) has not met the debtor’s obligations in terms of the trust deed, or

(ii) has not co-operated with the administration of the trust, and

(c) the trustee is satisfied that that failure to meet the debtor’s obligations under the trust deed or to co-operate with the administration of the trust is likely to continue until the period for which payments are required under the trust deed ends,

the trustee must as soon as reasonably practicable apply to AiB for agreement to refuse to discharge the debtor from the trust deed.

(3) An application under subsection (1) or (2) must—

(a) be in the form prescribed for that purpose in the Protected Trust Deeds (Forms) (Scotland) Regulations 2016, and

(b) include details of the trustee’s consideration under subsection (1) or, as the case may be, (2).

(4) Where AiB receives an application under subsection (1) or (2), and AiB agrees that the debtor should not be discharged from the trust deed, AiB must notify the trustee of that conclusion as soon as reasonably practicable.

(5) Where the trustee receives a notification from AiB under subsection (4), the trustee must—

(a) within 7 days, inform the debtor by notice in writing—

(i) of the fact and the reason for the refusal,

(ii) that the debtor is not discharged from the debtor’s debts and obligations in terms of the trust deed, and

(iii) of the debtor’s right to apply to the sheriff for a direction under section 189(1), and

(b) within 21 days of the date the notice is sent to the debtor under paragraph (a), send a copy of that notice to AiB.

(6) Where AiB considers that the debtor should be discharged from the trust deed, AiB must issue such direction to the trustee as it considers appropriate.

(7) Section 184(7) applies for the purposes of this section in the same way as it applies for the purposes of section 184(2)(a)(i).

(8) Nothing in this section prevents the trustee from being discharged under section 186.

184B

(1) This section applies where the trustee considers that, due to extenuating circumstances affecting the debtor—

(a) the debtor can no longer meet their obligations under the trust deed,

(b) there is no reasonable prospect of the debtor being able to resume meeting their obligations under the trust deed, and

(c) the debtor should be discharged from the trust deed before the end of the period for which payments are required under the trust deed.

(2) The trustee must send a notice to each of the creditors of whom the trustee is aware.

(3) A notice under subsection (2) must—

(a) include details of the trustee’s consideration under subsection (1), and

(b) seek agreement from the creditor that the debtor be discharged from the trust deed.

(4) The trustee must apply to AiB for the discharge of the debtor unless subsection (5) applies.

(5) This subsection applies if the trustee has, within 21 days of sending notices under subsection (2), received notification in writing from a majority in number, or no fewer than ⅓ in value, of the creditors that they object to the proposal to discharge the debtor.

(6) An application under subsection (4) must be in the form prescribed for that purpose by the Protected Trust Deeds (Forms) (Scotland) Regulations 2016.

(7) Before applying to AiB for the discharge of the debtor, the trustee must be satisfied that any notice of inhibition under paragraph 3 of schedule 4 has been recalled or has expired.

(8) On receipt of an application under subsection (4), AiB must register it in the register of insolvencies.

(9) Where AiB registers an application under subsection (4)—

(a) the debtor falls to be discharged from all debts and obligations—

(i) in terms of the protected trust deed, or

(ii) for which the debtor was liable as at the date that deed was granted,

(b) the date of discharge is the date on which the application is so registered, and

(i) the fact of registration, and

(ii) the date of the debtor’s discharge.

(10) The trustee must, within 7 days after receipt of the notification mentioned in subsection (8), notify the debtor and every creditor known to the trustee of the information set out in that notification.

(11) Section 184(6) applies to the notification of the debtor’s discharge under subsection (9) in the same way as it applies to a letter of discharge under section 184.

184C

(1) This section applies where—

(a) the trustee has, in accordance with section 184B(2) and (3), sought the agreement of the creditors to the early discharge of the debtor from a trust deed, and

(b) at the end of the period of 21 days beginning with the day on which notices are sent under section 184B(2), the trustee has received notification in writing from a majority in number, or no fewer than ⅓ in value, of the creditors that they object to the proposal to discharge the debtor.

(2) The trustee must apply to AiB for a review of the proposal that the debtor be discharged.

(3) An application for a review under subsection (2) must—

(a) include details of the trustee’s consideration under section 184B(1),

(b) include details of the objections received from the creditors, and

(4) Where it receives an application under subsection (2), AiB must—

(a) determine whether it is satisfied that, taking into account all the circumstances, it is fair and reasonable for the debtor to be discharged from the trust deed, and

(b) notify the trustee of the outcome of that review.

(5) The trustee must, no later than 7 days after receiving a notification under subsection (4)(b), notify the outcome of AiB’s review to—

(a) the debtor, and

(b) each creditor to whom notice was sent under section 184B(2).

(6) Where, after conducting a review under subsection (4), AiB determines that the debtor should be discharged from the trust deed—

(a) the trustee must apply to AiB for the discharge of the debtor, and

(b) on receipt of such an application, AiB must register it in the register of insolvencies.

(7) Where AiB registers an application under subsection (6)—

(a) the debtor falls to be discharged from all debts and obligations—

(i) in terms of the protected trust deed, or

(ii) for which the debtor was liable as at the date that deed was granted,

(b) the date of discharge is the date on which the application is so registered, and

(i) the fact of registration, and

(ii) the date of the debtor’s discharge.

(8) The trustee must, within 7 days after receipt of the notification mentioned in subsection (7)(c), notify the debtor and every creditor known to the trustee of the information set out in that notification.

(9) Section 184(6) applies to the notification of the debtor’s discharge under subsection (7) in the same way as it applies to a letter of discharge under section 184.

(10) Where, after conducting a review under subsection (4), AiB determines that the debtor should not be discharged from the trust deed, AiB must issue a direction to the trustee.

186A

(1) AiB may, of its own accord or on the representation of any person, appoint itself as trustee in a protected trust deed where AiB is satisfied that—

(a) the trustee under a protected trust deed is unable to continue to act under that protected trust deed (including, for example, because the trustee is no longer authorised to act as an insolvency practitioner or because the trustee has died),

(b) all reasonable efforts have been made to appoint a replacement trustee but without success, and

(2) Before appointing itself as trustee under subsection (1), AiB must—

(a) take into account any representations made by an interested person,

(b) consider the public interest, and

(3) Where AiB becomes the trustee in a protected trust deed by virtue of subsection (1), AiB must—

(a) notify—

(i) the debtor, and

(ii) each creditor of whom AiB is aware, and

(b) make an appropriate entry in the register of insolvencies.

186B

(1) Where AiB becomes the trustee in a protected trust deed by virtue of section 186A(1), this Part and schedule 4 apply to AiB as they apply to a trustee in a protected trust deed, subject to the following modifications.

(2) The following do not apply—

(a) section 165 (protected status: the trustee),

(b) sections 169 to 171,

(d) section 184A (protected trust deed: refusal of debtor discharge),

(e) paragraphs 1 and 2 of schedule 4 (voluntary trust deeds for creditors).

(3) Section 171A (removal of protected status where material error or irregularity) is to be read as if—

(a) in subsection (1), for “the trustee must notify AiB” there were substituted “AiB must decide whether the trust deed should cease to have protected status (see section 163)”,

(b) subsection (2) were omitted,

(i) for “subsection (2)” there were substituted “subsection (1)”,

(ii) for “the trustee and the debtor” there were substituted “the debtor and every creditor known to AiB (other than any secured creditor who has, as mentioned in paragraph (b)(ii) of the trust deed definition, agreed not to claim under the trust deed for any of the debt in respect of which the security is held)”,

(d) subsection (4) were omitted,

(e) in subsection (5)—

(i) “or 4” were omitted,

(ii) in paragraph (a), for “subsection (2)” there were substituted “subsection (1)”.

(4) Section 171B (decision under section 171A: application to review) is to be read as if—

(a) in subsection (1)—

(i) “, the trustee” were omitted, and

(ii) for “section 171A(2)” there were substituted “section 171A(1)”,

(b) in subsection (3), for “section 171A(2)” there were substituted “section 171A(1)”,

(d) in subsection (5)(a), “, the trustee” were omitted.

(5) Section 180 (information and notification obligations of trustee under protected trust deed) is to be read as if subsections (2) to (4) were omitted.

(6) Section 181 (administration of trust under protected trust deed) is to be read as if—

(a) subsections (1)(c), (4) and (5) were omitted,

(b) in subsection (2), “AiB” were omitted.

(7) Section 182 (retention of documents by trustee under protected trust deed) is to be read as if, in paragraph (p), for “, by notice to the trustee” to the end there were substituted “identifies as a document that should be retained.”.

(8) Section 183 (remuneration payable to trustee under protected trust deed), is to be read as if subsections (2)(b), (3), (4), (7) and (8) were omitted.

(9) Section 184 (protected trust deed: discharge of debtor) is to be read as if—

(a) subsections (1)(b), (4) and (9) to (11) were omitted,

(b) for subsection (3) there were substituted—

(3) AiB must record the fact and the date of the debtor’s discharge in the register of insolvencies.

(5) AiB must, within 7 days of recording the information referred to in subsection (3), notify the debtor and every creditor known to AiB of the fact and the date of the debtor’s discharge.

(10) Section 184B (protected trust deed: early discharge in extenuating circumstances) is to be read as if—

(a) for subsection (4) there were substituted—

(4) AiB must record the fact and the date of the debtor’s discharge in the register of insolvencies unless subsection (5) applies.

(b) subsections (6) and (8) were omitted,

(d) in subsection (9)—

(i) for “an application under subsection (4)” there were substituted “the fact and the date of the debtor’s discharge under subsection (4)”,

(ii) paragraph (c) were omitted.

(11) Section 184C (early discharge in extenuating circumstances: procedure where creditors object) is to be read as if—

(a) for subsection (2) there were substituted—

(2) AiB must review its proposal for the purpose of determining whether, taking account of all of the circumstances, it is fair and reasonable that the debtor be discharged.

(b) subsections (3) and (4) were omitted,

(5) AiB must notify the outcome of its review to— (a) the debtor, and (b) each creditor to whom notice was sent under section 184B(2).

(d) for subsection (6) there were substituted—

(6) Where, after conducting a review under subsection (2), AiB determines that the debtor should be discharged from the trust deed, AiB must record the fact and the date of the debtor’s discharge in the register of insolvencies.”,

(e) in subsection (7)—

(i) for “registers an application” there were substituted “registers the debtor’s discharge”,

(ii) in paragraph (b), for “the application” there were substituted “the discharge”,

(iii) in paragraph (c), for “the trustee” there were substituted “the debtor and every creditor known to AiB”,

(f) subsections (8) and (10) were omitted.

(12) Section 186 (protected trust deed: discharge of trustee) is to be read as if—

(a) subsection (4) were omitted,

(b) in subsection (8)—

(i) paragraphs (a) and (c) were omitted,

(ii) in paragraph (b), for “send AiB, for registration”, there were substituted “register”.

(13) Section 188 (protected trust deed: appeal) is to be read as if—

(a) subsections (1)(a) to (d) and (4) were omitted,

(b) in subsection (1)(e), for “section 184C(4)” there were substituted “184C(2)”.

Failure of debtor to co-operate with trustee

147A

(1) This section applies where—

(a) AiB is not the trustee in the sequestration,

(b) the period of 5 years beginning with the date of sequestration of a debtor’s estate has expired, and

(2) The trustee in the sequestration may apply to AiB for authority to resign office on account of the debtor’s failure to co-operate.

(3) An application under subsection (2) must be made in the prescribed form and include information about—

(a) the nature and the extent of the debtor’s failure to co-operate with the trustee,

(b) the actions taken by the trustee to secure the debtor’s co-operation,

(d) details of every creditor known to the trustee.

(4) Before making an application under subsection (2), the trustee must—

(a) notify the debtor by sending an intention to resign notice, and

(b) give an intention to resign notice to every creditor known to the trustee.

(5) An intention to resign notice must—

(a) be in the prescribed form, and

(b) include a statement informing the recipient that the recipient has a right to make representations to AiB in relation to the application within 14 days beginning with the day on which the application is made.

(6) After receiving an application under subsection (2), AiB must—

(a) take into account any representations made by an interested person within 14 days beginning with the day on which the application is made, and

(b) if satisfied of the matters mentioned in subsection (7), issue to the trustee who made the application a notice in the prescribed form granting the application.

(7) The matters are—

(a) that the debtor has failed to co-operate with the trustee to such an extent that the trustee is prevented from carrying out the trustee's functions under this Act,

(b) that the failure is likely to continue, and

(8) AiB—

(a) may request such further information from the trustee as AiB considers necessary to make a decision under subsection (6), and

(b) must notify the trustee, the debtor and every creditor known to AiB of its decision under subsection (6).

(9) Where a notice is issued under subsection (6)(b), 14 days after the notice is given—

(a) AiB is deemed to be the trustee,

(b) AiB must notify the debtor and every creditor known to AiB that AiB is deemed to be the trustee,

(d) the former trustee is not entitled to recover, other than by a claim in the final distribution of the debtor’s estate, outlays and remuneration payable under sections 132 and 133 (there being no effect on any outlays and remuneration paid to the former trustee before the issue of the notice),

(e) subsections (9) to (13) of section 69 apply in relation to the appointment of AiB as the new trustee as they apply in relation to the appointment of a new trustee under that section,

(f) section 116 applies as if there were substituted for subsection (2)—

(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.

, and

(g) section 138 applies to the sequestration with the modifications in subsection (10).

(10) The modifications are—

(a) in subsection (2), the words “after the date which is 12 months after the date on which sequestration is awarded” are omitted,

(b) in subsection (3), for “must, as soon as practicable after the date which is 12 months after the date on which sequestration is awarded” substitute “may, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee’s functions under this Act”,

(c) in subsection (6), for “must, as soon as practicable after the date which is 12 months after the date of the refusal” substitute “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act”.

147B

(1) The trustee may apply to AiB for a review of a decision under section 147A(6) to refuse an application.

(2) The debtor or any creditor may apply to AiB for a review of a decision under section 147A(6) to grant an application.

(3) Any application under subsection (1) or (2) must be made within 14 days beginning with the day of notification of the decision in question.

(4) If an application for review under subsection (2) is made, the grant of the application is suspended until the determination of that review by AiB.

(5) If an application for a review under subsection (1) or (2) 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 revoke the decision within 28 days beginning with the day on which the application is made.

(6) If, under subsection (5)(b), AiB—

(a) revoke a decision to grant an application, AiB must revoke the notice given under section 147A(6)(b) granting the application,

(b) revoke a decision to refuse an application, AiB must issue a notice under section 147A(6)(b) granting the application, or

(c) confirm a decision to grant an application, section 147A(9) applies as if for the words “14 days after the notice is given” there were substituted “14 days after the AiB decision under section 147B(5)(b)”.

(7) The debtor, the trustee or any creditor may appeal to the sheriff against any decision of AiB under subsection (5)(b) within 14 days beginning with the day of the decision.

(8) If an appeal relating to a decision mentioned in subsection (6)(b) or (c) is made, the grant of the application is suspended until the determination of that appeal.

(9) If, on an appeal under subsection (7), the sheriff determines that an application which has been refused should be granted—

(a) the sheriff must order AiB to issue a notice under section 147A(6)(b) granting the application, and

(b) section 147A (9) applies as if the words “14 days after the notice is given” were omitted.

(10) If, on an appeal under subsection (7), the sheriff determines that an application which has been granted should be refused, the sheriff must order AiB to revoke the notice given under section 147A(6)(b) granting the application.

(11) The sheriff clerk must send AiB a copy of the sheriff’s decree.

(12) The decision of the sheriff on an appeal under subsection (7) is final.

147C

(1) This section applies where—

(a) AiB is the trustee but was not appointed as trustee under section 147A,

(b) the period of 5 years beginning with the date of sequestration a debtor’s estate has expired, and

(2) AiB, if satisfied of the matters mentioned in subsection (3), may make a determination that the debtor has failed to co-operate.

(3) The matters are—

(a) that the debtor has failed to co-operate with AiB as trustee to such an extent that AiB is prevented from carrying out the AiB’s functions as trustee under this Act,

(b) that the failure is likely to continue, and

(4) If AiB makes a determination under subsection (2)—

(a) AiB must notify the debtor and every creditor known to AiB that AiB has made a determination under subsection (2), and

(b) section 116 applies as if there were substituted for subsection (2)—

(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.

, and

(c) section 138(6) applies as if for the words “must, as soon as practicable after the date which is 12 months after the date of the refusal” there were substituted “may, at any time after a refusal, if the debtor co-operates with AiB to such an extent that AiB is able to carry out the trustee's functions under this Act.

37A

(1) This section applies for the purpose of determining the amount of interest payable on the debtor’s debts in relation to a recall of an award of sequestration.

(2) Interest, between the date of sequestration and the date of payment of the debt, is payable at the rate specified in section 129(10), unless subsection (3) applies.

(3) This subsection applies if the whole of the debt is paid in full within 6 months after the date of the award of sequestration, in which case interest is not payable on the debt.

(4) For the avoidance of doubt, if only part of the debt is paid within 6 months after the date of the award of sequestration, interest is payable on the whole of the debt (including any part of the debt already paid since the award) in accordance with subsection (2).

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