Dear Trustee - Non co-operation process

Dear Trustee, 

I would be grateful if you could bring the contents of this letter to the attention of all staff who are involved in administering bankruptcy cases.

Subject to approval by Parliament, Section 12 of the Bankruptcy and Diligence (Scotland) Act 2024 will come into force on 25 June 2025.

Section 12 will insert new sections 147A-147B into the Bankruptcy (Scotland) Act 2016 (the “2016 Act”). Transitional provisions will apply the new legislation to existing cases.

In summary, the new sections provide that the trustee may apply to AiB to resign from office where the debtor has failed to co-operate, and for AiB to be deemed as trustee in the case, if the following criteria is met:

• the debtor is not discharged
• a period of at least five years since the date of sequestration has elapsed
• the trustee has not been able to carry out their statutory functions due to the non-cooperation of the debtor
• the trustee has made reasonable efforts to secure that cooperation

Guidance on dealing with these debtor non-cooperation cases is provided in the Notes for Guidance at section 14.2.1.

Trustees should note that authority to resign does not constitute discharge from the office of trustee and a separate application is required for discharge. The statutory process for discharge under section 148-149 of the 2016 Act is separate from the process for the resignation under section 147A.

In order to be discharged of liability, a person who has held the office of trustee must make an application for their discharge from any live bankruptcy. This does not affect the current trustee discharge process having the effect of discharging all previous trustees. 

The Notes for Guidance have been updated to reflect this process.

Section 149(9) applies the provisions of “this section” where a trustee has resigned office. We consider that the reference to “this section” should be read to include the provisions in section 148. The reason for this is that sections 148-149 are both derived from section 57 of the Bankruptcy (Scotland) Act 1985 (as amended), the provisions are inherently linked, and the intention of Parliament was that the 2016 Act was a pure consolidation Act.

Yours faithfully,

Simon Roberts

Head of Policy and Compliance