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

Trustees should note that regulation 33(7) of the Insurers (Reorganisation and Winding Up) Regulations 2004 as modified by regulation 40(11) of the Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005, requires that Schedule 4 to the 2016 Act should be read as if, after paragraph 4, there is included paragraphs 4A and 4B if an underwriting member or former member of the Society incorporated by Lloyd’s Act 1871 grants a trust deed for creditors in Scotland.

Paragraph 4A

Whether or not provision is made in any trust deed, where such a trust deed includes a composition in satisfaction of any insurance debts of a member or former member and a distribution to creditors of some or all of the assets of that member or former member in the course of or with a view to meeting obligations of his insurance business carried on at Lloyd's, the trustee may not provide for any insurance debt to be paid otherwise than in priority to such of his debts as are not insurance debts or preferred debts within the meaning of section 129(2).

Paragraph 4B for the purposes of paragraph 4A

• (a) insurance debt has the meaning it has in the Insurance (Reorganisation and Winding Up) Regulations 2004
• (b) member and former member have the meaning given in regulation 2(1) of the Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005.

The trustee may not provide for any insurance debt (as defined in regulation 2 of the Insurers (Reorganisation and Winding Up) Regulations 2004) to be paid otherwise than in priority to such of his debts as are not insurance debts or preferred debts within the meaning of section 129(2).