Accountant in Bankruptcy (AiB) has released official statistics reporting statutory debt solutions and company insolvencies in Scotland for the first quarter (April to June 2024) of the financial year 2024-25.

Scottish Statutory Debt Solutions Statistics for 2024-25 Quarter 1

• there were 2,056 personal insolvencies (bankruptcies and PTDs) in 2024-25 Q1, 45 (2.1%) fewer than in the same quarter in the previous financial year (2023-24 Q1)
• a total of 708 bankruptcies were awarded during this quarter – an increase of 2.3% when compared to the same quarter in 2023-24. PTDs have decreased by 4.3% since 2023-24 Q1 with 1,348 in 2024-25 Q1
• in Q1 of 2024-25, a total of 587 bankruptcy awards were made following applications submitted to AiB, all through the revised fee structure. Of this total, 547 (93.2%) applicants were not required to pay any fee at all
• there were 838 applications for moratoria granted in 2024-25 Q1. This is 62 (8.0%) more than the figure of 776 granted in the same quarter in 2023-24
• there were 1,378 debt payment programmes (DPPs) under the DAS approved in 2024-25 Q1, compared with 1,328 approved in the same quarter of 2023-24 an increase of 3.8%
• a total of 496 DPPs under the DAS were completed in 2024-25 Q1 – a 13% increase on the same quarter in 2023-24
• there were 331 DPPs revoked in 2024-25 Q1. This is 15 fewer than the 346 DPPs revoked in the same quarter of 2023-24, a decrease of 4.3%
• the number of Scottish registered companies becoming insolvent or entering receivership decreased in the first quarter of 2024-25 when comparing to the same quarter in 2023-24, with 283 companies becoming insolvent, 3.1% less than the first quarter of 2023-24 where 292 companies became insolvent

The figures released today were produced in accordance with the professional standards set out in the Code of Practice for Official Statistics.

Background

A full statement of Scottish Statutory Debt Solutions statistics for the first quarter of 2024-25 is available. 

Official statistics are produced by professionally independent statistical staff – more information on the standards of official statistics in Scotland is available,

Accountant in Bankruptcy (AiB) has a statutory duty to supervise all personal insolvencies in Scotland and administer those bankruptcies where the Accountant is appointed as trustee.

Legislation provides for all three statutory debt solutions in Scotland as well as the duties and functions of the AiB. The statute relating to bankruptcy, also known as sequestration, and Protected Trust Deeds is contained within the Bankruptcy (Scotland) Act 2016 (“the 2016 Act”) and associated regulations. The Debt Arrangement Scheme (DAS) is provided for by the Debt Arrangement and Attachment (Scotland) Act 2002 and associated regulations, notably the Debt Arrangement Scheme (Scotland) Regulations 2011.

The Insolvency Act 1986 is the primary legislation covering Corporate Insolvency in the UK. However, there is tertiary legislation which applies only in Scotland, being the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 and the Insolvency (Scotland) (Company Voluntary Arrangement and Administration) Rules 2018. These rules replaced the Insolvency (Scotland) Rules 1986. AiB is responsible for receiving, extracting and recording information from certain documents relating to company liquidations and receiverships as is required by the legislation referred to above.

Bankruptcy legislation has evolved over many years. The Bankruptcy and Diligence Act 2007 introduced reforms from 2008 including the option of self-nominated bankruptcy by application to AiB, along with a new access route through Low Income Low Asset (LILA) bankruptcy. This provided for a streamlined process for insolvent individuals with low income and very few assets. The Bankruptcy and Debt Advice (Scotland) Act 2014 (“BADA(S)”) saw LILA replaced by Minimal Asset Process (MAP) bankruptcy with effect from 1 April 2015, introducing more flexible entry criteria and a lower application fee.

BADA(S) also introduced a mandatory requirement for money advice prior to a self-nominated bankruptcy, thereby placing advice as an essential part of all statutory debt solutions in Scotland. The 2016 Act simplified and consolidated all previous statutes into one accessible piece of legislation as well encompassing the main statutory provisions for Protected Trust Deeds in primary legislation. Much of this had previously been contained in tertiary legislation through the Protected Trust Deeds (Scotland) Regulations 2013.

The Bankruptcy (Miscellaneous Amendment) (Scotland) Regulations 2021 came into force on 29 March 2021 and made permanent some of the temporary provisions introduced in Part 5 of Schedule 1 of the emergency Coronavirus (Scotland) (No.2) Act 2020. The provisions aim to streamline the bankruptcy administration process, improve access to MAP bankruptcy and reduce the cost of accessing bankruptcy.

In particular, these regulations amend the 2016 Act and associated regulations to: reduce bankruptcy application fees for debtors to £150 in respect of full administration and £50 in respect of MAP and remove application fees completely for those in receipt of certain prescribed benefits; increase the debt threshold for eligibility for MAP to £25,000 and remove student loan debt from the eligibility calculation; allow the electronic signature of bankruptcy forms and extend the time limit for submitting Debtor Contribution Order proposals from six to twelve weeks.

DAS is administered by AiB. A Debt Payment Programme (DPP) approved under DAS allows individuals to repay their debts in full over an extended period of time whilst providing protection from enforcement by their creditors and safeguarding their home as long as mortgage payments are maintained.

A DPP under the DAS can last for any period of time agreed by creditors or deemed fair and reasonable and, if approved, will freeze all interest, fees and charges on the debt included, resulting in them being waived on successful completion of the programme.

The Debt Arrangement Scheme (Scotland) Amendment Regulations 2019, the most recent DAS regulations that came into force in November 2019, introduced some important reforms. In particular, they removed any fees payable by a debtor for advice provision, irrespective of the advice organisation engaged and introduced revised fee structures and arrangements for payments distribution to creditors.

Emergency legislation known as the Coronavirus (Scotland) Act 2020 and the Coronavirus (Scotland) (No. 2) Act 2020 were introduced by the Scottish Government to aid in the response to the emergency situation caused by the ongoing pandemic. Both Acts included temporary measures which impact on insolvency legislation. This was deemed necessary: to strengthen debtor protections during this difficult time; to solve operational problems caused by the pandemic; and to ensure the system is well-equipped to deal with any surge in demand caused by the pandemic.

Coronavirus (Scotland) Act 2020: Schedule 2 of this Act increased the length of the moratorium against diligence created by section 195 to 198 of the Bankruptcy (Scotland) Act 2016. This is increased from 6 weeks to 6 months. During a moratorium a debtor is provided debt relief and protected from creditor debt enforcement. This gives debtors a chance to consider their options in dealing with problem debt and set up a statutory debt solution.

Schedule 2 also removed the prohibition against benefitting from more than one moratorium in any 12 month period. This ensures that those who had a moratorium before the new timescale was introduced would not be excluded from the longer period of protection.

Coronavirus (Scotland) (No. 2) Act 2020: Part 5 of Schedule 1 of this Act made several temporary changes to bankruptcy legislation. Some of these changes focused on the operational aspect of bankruptcy to ensure efficiency and flexibility in bankruptcy administration against the backdrop of COVID-19. These changes included: allowing the electronic signature and service of documents; increasing the deadline for submitting Debtor Contribution Order proposals; and allowing creditor meetings in bankruptcy to be carried out virtually.

Further measures were included to improve access to MAP. The debt threshold for eligibility was increased from £17,000 to £25,000 and student loan debt was removed from contributing to this eligibility calculation. The Act also provided lower cost access to both the Full Administration and MAP routes to bankruptcy, with complete removal of fees for those in receipt of certain prescribed benefits. Debtor application costs for Full Administration are reduced from £200 to £150 and MAP application fees are reduced from £90 to £50.

Lastly, the Act secures extra debtor protection by modifying the eligibility criteria for a creditor to petition for sequestration by raising the amount of money a creditor or a group of creditors must be owed in order to be “qualified” to raise proceedings from £3,000 to £10,000.

The Bankruptcy (Miscellaneous Amendment) (Scotland) Regulations 2021 (the “2021 Regulations”) replaced some of these temporary changes with the equivalent permanent provision as outlined above.

Expiry of Coronavirus Acts: Both Acts were previously extended to 31 March 2021. The 2021 Regulations bring forward the expiry of the measures in the Coronavirus (Scotland) (No.2) Act 2020 that have been replaced with permanent provisions. The 2021 Regulations bring forward the expiry of the measures in the Coronavirus (Scotland) (No.2) Act 2020 that have been replaced with permanent provisions. The remaining provisions which otherwise would have expired on 30 September 2021 will now be extended through the Coronavirus (Extension and Expiry) (Scotland) Bill until 31 March 2022 with the option for further extension to 30 September 2022. This is with the exception of the provision removing the prohibition against benefitting from more than one moratorium in any 12 month period. This measure expired on 30 September 2021 and the original provision in the 2016 Act has now been reinstated so that only one moratorium application may be made within 12 months.

The Coronavirus (Recovery and Reform) (Scotland) Act commenced on 01 October 2022. This includes measures to help Scotland recover from the pandemic and ensure greater resilience against future public health threats. In terms of bankruptcy, this Act includes modernising provisions that enable electronic delivery of documents and remote meetings of creditors in bankruptcy proceedings.  

The Act provides additional protections for those dealing with problem debt. It amends the debt level specified in the definition of “qualified creditor” and “qualified creditors” from £3,000 to £5,000. This is the debt level that can enable a creditor to petition for bankruptcy through the Scottish Courts. The Bill fixes the period of protection provided by the statutory moratorium on diligence at 6 months, providing continuation of the enhanced protection introduced on a temporary basis through the Coronavirus (Scotland) Act 2020. Prior to the temporary provisions, the protection period was fixed at 6 weeks. 

The Bankruptcy and Debt Arrangement Scheme (Miscellaneous Amendment) Regulations 2023 came into force on the 6 February 2023. The provisions included in the regulations were brought in to help with the current cost crisis. These include  the removal of the minimum debt level to access Minimal Asset Process bankruptcy, and removal of application fee requirements for bankruptcy if the applicant is assess by the Common Financial Tool as having no surplus income. Also included is the increase to the deposit paid by creditors from £300 to £750 where AiB is nominated as trustee in a creditor petition bankruptcy. For the Debt Arrangement Scheme, measures amended the payment break process so that an application could be made where there was a 50% reduction in disposable income where it is considered that the reduction will last for the period of the break, and the circumstances previously required for a payment break were removed.

Details of bankruptcies, PTDs, liquidations and receiverships are found on the Register of Insolvencies. Details of DPPs under DAS are found on the DAS Register. Both registers are maintained by AiB.

Further information regarding insolvency in Scotland, including legislation, can be found on the AiB website.