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

If the trustee has sufficient funds from the debtor’s estate, he must pay dividend to creditors after 12 months from the date the trust deed was granted and every three months thereafter (the dividend period). There is no statutory requirement for the trustee to obtain a Form of Receipt from a creditor prior to payment of a dividend and trustees must not insist on the completion of such a form, as a pre-condition of dividend payment.

An interim dividend must be paid when after taking account of:

• the trustee’s fees and outlays to date
• an allowance has been made for any future contingencies
• whether there are funds left to pay a minimum of 5p/£ to creditors on adjudicated claims which have been accepted

The adjudication process should be completed within 12 months of the date of granting of the trust deed. Although the Section 176 of the 2016 Act stipulates the conditions under which an interim dividend must be paid, it is considered good practice for trustees to pay an interim dividend where a meaningful sum can be paid, even if this falls short of the 5p/£ sum set out in legislation. In particular, PTDs involving significant levels of debt could involve the payment of large sums to creditors even although these would represent less than 5p/£ when considering the total debt.

If an interim dividend can be paid:

• it must be paid within six weeks after the end of the first 12 month period of the PTD
• within six weeks after every subsequent 3 months, beginning with the end of the previous dividend period

Section 176 of the 2016 Act refers.

Section 181 of the 2016 Act allows a debtor or creditor to request an audit within 2 weeks after receipt of the trustee’s annual accounts. Where a dividend will be payable and the timing corresponds with the statement, the trustee should allow for the 14 day audit request period to lapse when issuing the annual statement to allow any dividend to be paid before the end of the 6 week period.