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

An application for recall to the Accountant is made under section 31 of the Act and the procedure to be followed is laid down in sections 32 to 34 of the Act.

The application may only be made on the ground that the debtor has paid, or is able to pay, their debts in full.

This function is carried out by the Bankruptcy Applications and Decisions (BAD) team on behalf of the Accountant.

An application must be made on a Form 1 of the Applications and Decisions Regulations.

An application can be made by:

• a debtor
• the trustee
• any creditor
• any other person having an interest (i.e. representative of the debtor such as a solicitor or accountant)

At the same time as applying to the Accountant the applicant must give a copy of the application to:

• the debtor
• the trustee
• any person who was a petitioner for or concurred in a debtor application for the bankruptcy

A notice with the application must inform the recipient of their right to make written representations to the BAD team before the expiry of the period of 21 days beginning with the day on which the notice is given.

2.6.1 Initial actions of the trustee 

When the application is made by the trustee they must notify every known creditor within seven days of the application being made, or when the application is made by another person, within seven days of notice being given to the trustee.

The notification should advise the creditor they must, if they have not already done so, submit a claim within 14 days of the notification in order to be included in the Statement on the Debtor’s Affairs (the statement) made by the trustee and paid through the recall process.

When the trustee is unable to make the notification within the required period they must make an application under section 212 of the Act (See section 18.3).

The trustee must prepare and submit to the BAD team, the statement at the same time as they makes the application under section 31, or when the application is made by another person, before the expiry of the period of 21 days beginning with the day on which the notice is given.

The statement must contain the following information:

• the date the application was received by the trustee
• a declaration that the debtor has agreed to the interim trustee and trustee’s claim for outlays and remuneration. This will include those incurred and yet to be incurred. The Accountant will not accept the trustee’s statement if it does not include this declaration
• details of any payments that have been made from the estate
• state whether or not the debtor’s debts have been paid in full (including the above)
• when the debts have not been paid indicate whether, in the opinion of the trustee, the debtor’s assets are likely to be sufficient to pay the debts in full within eight weeks from the date of the statement
• details of the debts that have not been paid
• details of all creditors (including addresses and reference numbers) who have made a claim prior to, or within 14 days beginning with the day on which the notification of the recall application was issued by the trustee
• when appropriate, details of the payments made to the creditors who had submitted claims

When the trustee is unable to submit the statement within the required period they must make an application under section 212 of the Act (See section 18.3).

The trustee should continue to administer the bankruptcy until a decision on the application is made or they are notified it has been withdrawn.

2.6.2 Trustee's remuneration and outlays not agreed

When the trustee and debtor have been unable to agree the amount of the outlays and remuneration the Accountant will determine the amount to be paid.

The debtor should be advised the determination fee set by The Fees Order will be charged and must be paid by the debtor as an outlay of the bankruptcy before recall is granted.

This function will be carried out by the Bankruptcy Accounts Team and the audit and determination will be carried out in accordance with section 133 of the Act. See section 13 for more information.

At the same time as submitting the statement, the trustee should provide the Accounts Team with:

• the receipts and payments account under dispute with any claim for remuneration and outlays (including anticipated remuneration and outlays)
• invoices in support of those outlays
• detailed timesheets
• the trustee’s case and correspondence files
• any other information the team should be made aware of

Trustees should ensure any contingency fees and outlays recorded in the accounts, for example, distribution of funds and case closure action can be justified and an explanation with a calculation of the amount(s) claimed are provided.

If the expenses of the petitioning creditor are to be determined this should be requested and evidence in support of the expenses provided.

The Bankruptcy Accounts team must, before the expiry of 28 days from date the statement was due, issue a determination fixing the amount of the outlays and remuneration payable to the trustee and the determination is subject to usual appeal process. See section 13.13.

2.6.3 Actions of the Bankruptcy and Decisions Team

The BAD team will issue an invoice to the applicant. The fee to be applied can be found in The Fees Order.

They will notify the trustee of receipt of the application at AiB and advise the date on which the first statement is due. However, the trustee should not wait for receipt of this notification before undertaking their responsibilities as prescribed in section 32 of the Act.

They may, at any time before determining an application for recall, remit the application to the sheriff.  When an application is remitted all relevant parties will be notified.

Upon receipt of the first statement, if recall cannot be granted at that time, AST will notify the trustee and the applicant of the actions required to be undertaken and the date they must be completed for recall to be granted.

They may make any necessary enquiries of the applicant, or any person making representation. Any request will be made in writing and specify the time period under which the information, evidence or documentation must be provided.

They may, if satisfied there is a good reason, require any person making an application, or making representations:

• to provide any document or information as may be reasonably required
• to attend a hearing, at such time and place as may be specified for the purposes of giving evidence

2.6.4 Further action required by the trustee

When the application is made by the trustee and a creditor submits a claim within the specified period they must update and resubmit the statement within 21 days of the notice being issued.

The trustee must also update and resubmit their statement when the previous statement did not advise all debts had been paid in full. This second statement must be made before the day on which the application is determined by the BAD team.

The second statement should contain the following information:

• confirmation the debts have been paid in full (including the interim trustee and trustee outlays and remuneration)
• details of any payments made from the estate
• details of the payments made to the creditors who had submitted claims

2.6.5 Actions of the Accountant 

Recall may be granted by the Accountant only within the eight weeks after the day on which the statement was first submitted under section 2.6.1 of these notes, and when no appeal is made against any determination by AiB of the trustee’s outlays and remuneration. When such an appeal is made the Accountant may grant recall within 14 days of the day on which the appeal is finally determined or abandoned.

The Accountant may grant recall if they are satisfied that:

• the trustee has notified in a Statement all debts have been paid in full (including the trustee’s/interim trustee’s outlays and remuneration)
• any representation has been considered
• in all the circumstances it is appropriate to do so

If the Accountant does not grant recall the bankruptcy is to continue but is to be subject to such conditions as the Accountant thinks fit.

Upon the determination of the application the BAD team will notify:

• the debtor
• any person who was a petitioner for, or concurred in a debtor application for, the bankruptcy
• the trustee
• any other person having an interest

The BAD team will place a copy of the determination in the electronic Sederunt Book. 

If granted, the BAD team will:

• send a copy of the notice to The Keeper of the Register of Inhibitions and Adjudications
• place a copy of the notice in the electronic Sederunt Book

The date of recall will also be the date of the trustee discharge. The trustee should ensure all relevant documents are uploaded to the electronic Sederunt Book on BASYS.

2.6.6 Recall - review and appeal 

A review application can be made to the Accountant’s independent review team following a decision made by the Accountant to grant, or refuse to grant, a recall of bankruptcy by:

• the debtor
• any creditor
• the trustee
• any interested person

An application must be received before the expiry of 14 days from the date the decision was made by the Accountant.

A copy of the review application will be sent to any person having an interest. They will be advised they may make submissions before the expiry of 21 days from the date the review application was received.

The team must take into consideration any submissions made by the applicant, or interested parties, before the expiry of 21 days from the date the application.

The outcome of the review to confirm, revoke or amend the decision must be made before the expiry of 28 days from the date the application for review was made.

Any person entitled to request a review may appeal the review decision to the sheriff before the expiry of 14 days from the date the review decision, was made. The sheriff’s decision is final.