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Notes for Guidance - Protected Trust Deeds - Bankruptcy (Scotland) Act 2016

This guidance describes the general functions of Accountant in Bankruptcy and trustees in relation to their responsibilities regarding protected trust deeds (PTDs) which were granted on or after 30 November 2016

5.1 Removal of Protection due to material error or irregularity

If the trustee becomes aware within 3 months of the protected date that any of the conditions set out in in sections 164, 165, 166(2) (where it applies) and 167 to 170 of The Act were not met due to a material error or material irregularity, they must notify AiB as soon as is reasonably practicable.

AiB must then decide whether the trust deed should cease to have protected status. In making this decision, AiB will consider whether the nature of the material error or irregularity should have prevented the trust deed from gaining protected status from the outset, the impact on creditors, and the consequences of removing protection.  Where AiB decides that protection should be removed under Section 171A of The Act, AiB must notify the trustee and the debtor of that decision, outlining the grounds for the decision and the date of decision.

Once the notification is received by the trustee, the trustee must then notify all known creditors as soon as reasonably practicable (excluding any secured creditor mentioned in paragraph (b)(ii) of the trust deed definition, who has agreed not to claim under the trust deed for any of the debt in respect of which the security is held).

The trust deed will cease to have protected status after 14 days of the AiB notice, unless a review application is received by AiB, see Section 5.2. If no review is received, AiB must remove the entry for the trust deed on the register of insolvencies and the protected status will cease.

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