On May 15, 2025, UK SCT GVT published the Bankruptcy and diligence (Scotland) act 2024 (consequential amendments and forms) regulations 2025 (StIn 2025/145).
On the same day, UK SCT AIB published an overview of the regulations.
These consequential regulations bring into force the consequential amendments required with commencement of sections 4 and 12 of the 2024 Act.
Sections 4, 5, 11 and 12 (so far as not already in force) of 2024 Act will be brought into force on Jun. 25, 2025, which is the same date these regs come into force.
Consequential regulations will amend reg 9 of Bankruptcy (applications and decisions) (Scotland) regulations 2016 to remove any ambiguity in the notification process where UK SCT AIB is trustee and acts of its own accord in proposing recall of sequestration.
This will effectively bring the notification process in this scenario in line with the process when an application for recall is made to UK SCT AIB by another party.
Provide forms to support introduction of s. 12 of 2024 Act where trustee seeks resignation from office, and for UK SCT AIB to be appointed as new trustee.
On Jul. 24, UK SCT PRL issued Act on bankruptcy and diligence.
The Act provides an enabling power to establish a mental health moratorium on debt recovery action and makes technical modifications to the Bankruptcy (Scotland) Act 2016 and to the law of diligence (Scotland’s formal debt recovery mechanisms).
Document dated Jul. 24, 2024, was received on Mar. 11, 2025 due to a new feed.
Moratorium
The Act imposes a duty on the Scottish Ministers to make provision by regulations to establish a moratorium (meaning a temporary suspension for a set amount of time) on debt recovery action in relation to individuals who have a mental illness.
Sequestration (Bankruptcy)
Bankruptcy (Scotland) Act 2016 allows UK SCT AIB to recall an award of sequestration on the grounds that the debtor has paid, or is about to pay, their debts in full.
The effect of the recall is, so far as practicable, to restore the debtor and any other person affected by the sequestration to the position the debtor, or, as the case may be, the other person, would have been in if the sequestration had not been awarded.
The sequestration process is administered by a trustee (either private trustee or AIB).
The process for applying for a recall of an award of sequestration differs depending on who initiates the process and whether or not the trustee is the AIB.
There are 3 scenarios for applying for a recall of an award of sequestration: 1) where the AIB is not the trustee, 2) where the AIB is the trustee and another party makes the application, or 3) where the AIB is the trustee and acts on its own accord.
Amendments are made in order to clarify the process for each of these scenarios.
Further amendments make the payment of interest a pre-requisite of recall, except where the debt is paid in full within 6 months of the award of sequestration.
Period for citation of the debtor is extended by removing the upper limit of 14 days.
The Act makes amendments to correct a cross referencing error in section 98(7).
Sections 69(12) and 134(3) are amended so that an appeal to the sheriff against a determination by AIB must be made within 14 days beginning with the date of any decision of AIB in an appeal under section 69(11)(a) or section 134(1)(a), respectively.
S 10 is amended regarding information and time for a debtor consider trust deeds.
New sections 147A, 147B, 147C are added regarding the situation where the debtor has failed to co-operate with trustee in sequestration.
Arrestment and Action of Furthcoming
A new S73CA added into the Debtors (Scotland) Act 1987 provides that documents must be served on the arrestee either by being sent to the proper address of the arrestee, or by being transmitted to the arrestee electronically.
S 73G of the 1987 Act includes a duty on arrestees to disclose to an arresting creditor the existence of and the value of assets attached by an arrestment; arrestment is a form of diligence which can be used to recover debt owed by a debtor to a creditor.
A reference to an “arrestee” is a reference to the legal person who holds assets (property or funds) on behalf of debtor and may be a bank/other financial institution.
The new disclosure being required is to be submitted in the same way that existing disclosures are required to be made under S73G; the prescribed form must be sent within 3 weeks of the date on which schedule of arrestment is served on the arrestee.
A copy of the disclosure must be sent to the debtor; there will however be no requirement to send a copy of the form to any other person under section (5)(b) in such cases since no property or funds will have attached.
S 73H(1) provides that, where an arrestee fails to make a disclosure under S73G(2) the arrestee may be required to pay the creditor the lesser of either the sum due by the debtor to the creditor or the amount which represents the minimum protected balance in bank accounts which are subject to an arrestment
This amount may be amended by regulations made by the Scottish Ministers.
Within a year of the Act coming into force, Scottish Ministers must carry out a consultation on attaching funds or property and establishing, or modifying, a process whereby debtors may apply to have certain arrested funds or property released.
Other Amendments
Additional amendments are made to the 1987 Act regarding Service of documents and employers’ etc. duty of disclosure; provision of debt advice and information package.
Notice and redemption periods; money attachment; arrestment of ships.
Effectiveness
Sections 21 to 23 come into force on the day after Royal Assent. e.g Jul. 16, 2024.
The other provisions of this Act come into force on such day as the Scottish Ministers may by regulations appoint. which may include transitional, transitory or saving provision, and/or make different provision for different purposes.
Mar. 2025 Commencement
On Mar. 26, 2025, UK SCT AIB said The Bankruptcy and Diligence (Scotland) Act 2024 (Commencement No.1, Transitional and Saving Provisions) Regulations 2024 (StIn 2024/373) were passed by Parliament and came into force on Jan. 20, 2025.
Document of Mar. 26, 2025, received from UK SCT AIB, Mar. 26 summarized Mar. 27.
Regulations bring into force sections 6, 8, 9 10, 13, 17, 19 and 20 of BD(S)A 2024.
Amending S 22, S 98 to correct cross-reference errors; also S 69, S 134 to provide that specified parties can appeal to the sheriff within 14 days of UK SCT AIB issuing a decision following an appeal on a determination issued by commissioners fixing the amount of outlays and remuneration payable to the trustee or their representatives.
Where UK SCT AIB issued a decision before Jan. 20, 2025, that decision may be appealed to sheriff up to 14 days after Jan. 20, 2025, instead of within 14 days.
Creating a requirement, where a trust deed is granted by a debtor on or after Jan. 20, 2025, for a trustee to provide the debtor with a copy of a trust deed information document in addition to the Debt Advice and Information Package (DAIP).
Also requires trustee to give debtor adequate time to consider the information given to them and whether a trust deed is the appropriate solution to address their debts.
It does not apply where the trust deed has been granted before Jan. 20, 2025.
Modifying S 76, S 77 to reinstate the position that no commissioners may be elected in sequestration cases when AIB is the trustee and where a commissioner already holds office, that commissioner would cease to hold office if AIB becomes the trustee.
Requiring a creditor, where they are applying to the court for a warrant for diligence on the dependence under S 15D(1) of the Debtors (Scotland) Act 1987, to provide the debtor with a DAIP. If this has not been provided the court cannot grant the warrant.
This does not apply where the application was made before Jan. 20, 2025.
Making it competent for a sheriff officer to execute money attachment on any day or at any time when premises are open for the purposes of trade or business without the requirement to obtain prior approval from the court where it is outside 8am and 8pm.
Allowing arrestment to found jurisdiction of a ship to take place on a Sunday.
Apr. 2025 Second Commencement
On Apr. 3, 2025, UK SCT GVT and UK SCT AIB announced publication of Thebankruptcy and diligence (Scotland) act 2024 (commencement no. 2, transitional and saving provisions) regulations 2025 (StIn 2025/107), in force on Apr. 17, 2025.
Apr. 17, 2025 is day appointed for coming into force of section 12 (failure of debtor to co-operate with trustee in sequestration) but only to enable Scottish ministers to prescribe forms under s.147A(3), (5)(a), (6)(b) of 2016 Act (as inserted by s. 12).
Jun. 25, 2025 is the day appointed for the coming into force of section 4 (process for applying for recall of an award of sequestration); section 5 (recall of sequestration: payment of interest); section 11 (debtor not traced: former trustee’s outlays and remuneration), as well as section 12 in so far as it is not already in force.
Regs primarily make amends to Bankruptcy (Scotland) Act 2016 (B(S)A 2016 (SCT)) by making changes to clarify process for applying for recall of sequestration.
These only apply where application for recall has not been made before Jun. 25, 2025.
Where a debtor is seeking recall of sequestration, not a condition for recall for interest to be paid on debts if debts are paid in full within 6 months of award of sequestration.
For existing cases interest accrued on debt between date of sequestration and date of payment of debt is not payable if payment of debt is made within 6 mths after Jun. 25.
Allows a trustee in sequestration to resign if the debtor cannot be traced and clarifies that the trustee is entitled to take outlays and remuneration from the ingathered estate up to the date of their resignation.
Introduces a new process for a trustee to resign from office, when a debtor has failed to cooperate, by applying for the Accountant in Bankruptcy to take over as trustee.
May 2025 Consequential Regulations
On May 15, 2025, UK SCT GVT published the Bankruptcy and diligence (Scotland) act 2024 (consequential amendments and forms) regulations 2025 (StIn 2025/145).
On the same day, UK SCT AIB published an overview of the regulations.
These consequential regulations bring into force the consequential amendments required with commencement of sections 4 and 12 of the 2024 Act.
Sections 4, 5, 11 and 12 (so far as not already in force) of 2024 Act will be brought into force on Jun. 25, 2025, which is the same date these regs come into force.
Consequential regulations will amend reg 9 of Bankruptcy (applications and decisions) (Scotland) regulations 2016 to remove any ambiguity in the notification process where UK SCT AIB is trustee and acts of its own accord in proposing recall of sequestration.
This will effectively bring the notification process in this scenario in line with the process when an application for recall is made to UK SCT AIB by another party.
Provide forms to support introduction of s. 12 of 2024 Act where trustee seeks resignation from office, and for UK SCT AIB to be appointed as new trustee.
