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

The functions of an interim trustee pending the award of bankruptcy can be found at section 4.4.1.

All monies received by the interim trustee in the exercise of their functions over the debtor’s estate shall be deposited in an interest bearing account in the name of the debtor. The interim trustee may retain a sum not exceeding £200 from the debtor’s estate and should ensure they comply with their recognised professional body’s money regulations.

See section 12.7.3 for details on personal liability and rights of relief of interim trustees in respect of fees due to the Accountant.

The interim trustee may give general or particular directions to the debtor relating to the management of the estate under sections 39(2) and 53(1) of the Act.

An interim trustee can:

• require the debtor to deliver any money, valuables and documents relating to their business or financial affairs which belong to, or are in the possession of, the debtor or under their control
• place in safe custody anything obtained as detailed above
• require the debtor to deliver any perishable goods which are under their control and may arrange for the sale or disposal of these goods
• make an inventory and/or valuation of all property known to belong to the debtor (see section 3.2)
• require the debtor to implement any transaction entered into by the debtor
• effect or maintain insurance policies in respect of the business or property of the debtor
• carry on any business of the debtor or borrow money in so far as is necessary to safeguard the debtor's estate

The interim trustee must take care to clarify any funds received from the debtor are not derived from social security benefits or tax credits as these do not vest in the interim trustee under section 187(1) of the Social Security Administration Act 1992 and the Tax Credits Act 2002.

If a debtor inadvertently pays money from this type of source the interim trustee must return the funds. This applies even if the payment is made voluntarily and in full knowledge of the rules on the inalienability of these funds.

On application by the interim trustee a sheriff may:

• on cause shown, grant a warrant authorising the interim trustee to enter the debtor’s house or their business premises, open locked doors as required and search for and take possession of assets
• make any other order they think is required to safeguard the debtor's estate

If an interim trustee requires possession of records to carry out their functions they are entitled to have them under sections 39(2)(a) & (b) of the Act. If there is any difficulty the interim trustee should apply to the sheriff for an order or a warrant to search and take possession under section 39(4) of the Act.

If the debtor thinks the direction is unreasonable they may apply to the sheriff to request it is set aside. If the sheriff agrees they may also issue a new order giving such directions to the debtor regarding the management of their estate as the sheriff considers appropriate.

If an appeal is made the debtor must comply with the direction pending the final determination of the appeal.

There are penalties provided under Section 40(2) of the Act when the debtor does not comply with the directions or requirements of the interim trustee, or obstructs the interim trustee in their entry and search of the debtor’s house or business premises.

A debtor’s failure to co-operate with the interim trustee is grounds to make a referral to The Accountant for consideration of imposing a BRO under Section 156(2)(n) of the Act. See section 16 for further information.