Bankruptcy (Scotland) Act 2016: Personal insolvency made clearer

These new rules effectively consolidate the law on personal insolvency in Scotland.

Why?

30 years’ worth of amendments to the Bankruptcy (Scotland) Act 1985 (“1985 Act”) had made the law on personal insolvency very cumbersome. The old legislation became a challenge to use, even for those who used it on a regular basis.

The 2016 Act repeals the 1985 Act in full and looks to modernise bankruptcy law in Scotland. By adopting a sensible structure for the 2016 Act, practitioners will no longer need to navigate their way through unwieldy legislation.

With some exceptions, the 2016 Act does not rewrite the law on personal insolvency but rather consolidates and simplifies existing provisions. Where the 1985 Act was originally only 78 sections long, the 2016 Act has 238 sections which progress through the personal insolvency process in a more structured way from the initial applications and petitions, and the tests for sequestration, to the discharge of the debtor and trustee.

The 2016 Act and 2016 Regs clarify where the decision making power lies, transferring further powers from the court to the Accountant in Bankruptcy (AiB).

The AiB now has the power to recall a sequestration and has the ability to grant bankruptcy restriction orders for periods of up to 5 years.

The 2016 Regs set out the procedure for making general and specific applications to the AiB and how the AiB should make decisions.

The new rules apply to sequestrations where the petition was presented, the application made or trust deed executed, from today.

If you would like to find out more, please contact Leon Breakey