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Notes for Guidance - Bankruptcy (Scotland) Act 2016 (as amended)

This guidance describes the general functions of Accountant in Bankruptcy, interim trustees, trustees and commissioners in relation to their responsibilities regarding bankruptcies which started on or after 30 November 2016.

13.5 Fees and outlays payable on appointment of a replacement trustee

Section 133(3)(a) requires the Accountant to take account of the work reasonably undertaken by the trustee in fixing the remuneration payable, having regard to the value of the debtor’s estate which has been realised by the trustee.

Accordingly, it is the Accountant’s position, when the replacement trustee has been appointed for a bankruptcy, as a condition of a commercial arrangement between Insolvency Practitioners (or their firms), any fees and outlays incurred as a cost of the replacement trustee process will not automatically be approved by the Accountant to be paid from the bankruptcy estate.

These fees and outlays must not be recorded in the bankruptcy accounts unless their payment has been approved in advance by the Accountant, or by a sheriff.

If the original, or replacement’ trustee wishes approval of these fees and costs, representation must be made, prior to preparing the accounts explaining why the trustee believes payment from the debtor’s estate is appropriate.

It is the Accountant’s opinion it is not appropriate for the fee rates of a replacement trustee to be applied until their appointment has been confirmed by the Accountant or a sheriff, as appropriate.

Responsibility for the administration of the bankruptcy remains with the original trustee until such time as a replacement trustee is appointed.

When a replacement trustee has been appointed the accounts prepared must record remuneration using the fee rates charged by the original trustee up until the date of the appointment of the replacement trustee.

The replacement trustee’s fee rates must be charged from the date of their appointment. If accounts are presented to the Accountant for audit, and the fee rates have not been calculated as above the accounts will be returned to the trustee for amendment, unless the trustee can demonstrate either creditors have approved the fee rates charged for the periods recorded in the accounts, or the fee rates and the date of their introduction, have been approved by the Accountant or a sheriff.

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