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Latest insolvency statistics
16/10/2008
Statistics showing insolvencies in the second quarter of year ending 31/3/09 were published today by the Accountant in Bankruptcy. Figures are collated to 30/9/08.
INDIVIDUAL INSOLVENCIES
There were 5998 individual insolvencies in Scotland in the second quarter of this year. This represented an increase of 27 per cent on the previous quarter and an increase of 70 per cent on the same period in the previous year.
The total was made up of 4055 bankruptcies, an increase of 42 per cent on the previous quarter and an increase of 162 per cent on the corresponding quarter of the previous year, and 1943 Protected Trust Deeds (PTDs), an increase of 3 per cent on the previous quarter and a decrease of 2 per cent on the corresponding quarter of last year.
As in the last quarter, the increase in bankruptcies is attributed to the introduction on April 1, 2008 of a new route into bankruptcy for people who have low income and low assets. Some people were previously unable to make themselves bankrupt unless they had the concurrence of a creditor or they were apparently insolvent, that is, a creditor was taking legal steps against them to pursue what was owed. The Bankruptcy and Diligence etc. (Scotland) Act 2007 introduced the 'Low Income, Low Asset' (LILA) route, whereby people who meet the relevant criteria can apply for their own bankruptcy without proving apparent insolvency.
Of the 3047 debtor applications received by the Accountant in Bankruptcy in the second quarter of 2008/09, there were 2773 individuals who were awarded bankruptcy because they met the LILA criteria and 491 who were awarded bankruptcy through apparent insolvency. At the end of the quarter, there were 451 applications still being processed and 166 applications had been rejected or returned. There were also 718 awards of bankruptcy as a result of creditor petitions during the quarter, a decrease of 2 per cent on the previous quarter and a decrease of 8 per cent on the corresponding quarter of last year.
In Scotland, a trustee is appointed to administer each bankruptcy. A nominated insolvency practitioner may be appointed as trustee or the Accountant in Bankruptcy may be appointed. Since April 1, 2008, the Accountant in Bankruptcy has been appointed trustee in 6305 cases representing 91 per cent of all bankruptcies awarded so far this year. The Accountant in Bankruptcy is deemed to be trustee in all bankruptcies awarded through LILA. Of the non-LILA bankruptcy awards where the Accountant has been appointed trustee, 39 per cent of cases are being administered in-house and the remainder are being administered by insolvency practitioners carrying out work on behalf of the Accountant.
COMPANY LIQUIDATIONS AND RECEIVERSHIPS
The Accountant in Bankruptcy received 289 notices of Scottish companies entering liquidation or receivership in the second quarter of 2008/09. This was an increase of 30 per cent on the previous quarter and an increase of 43 per cent on the same period a year ago.
These figures include all types of liquidation notified.
The Accountant in Bankruptcy supervises all personal insolvencies in Scotland and administers those bankruptcies where appointed. Insolvent individuals in Scotland are subject to bankruptcy (sequestration) or enter Protected Trust Deeds (PTDs) under the Bankruptcy (Scotland) Act 1985. This Act was amended by the Bankruptcy (Scotland) Act 1993. On April 1, 2008, part 1 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 came into force making significant changes to some aspects of bankruptcy, debt relief and debt enforcement in Scotland. This included the introduction of the new route into bankruptcy for people with low income and low assets. It also took a number of processes out of the Scottish Court system, reducing costs and freeing court time.
PTDs are voluntary arrangements, where the debtor passes his estate to an insolvency practitioner who arranges to repay part of the debt to creditors on the debtor's behalf. This is similar to Individual Voluntary Agreements (IVAs) in England and Wales, although there are important differences in the way they are set up and administered.
The Accountant in Bankruptcy is also responsible for receiving, extracting and recording information from certain forms relating to company liquidations and receiverships. All liquidations are recorded, including liquidation of companies through members voluntary liquidation. Companies entering members voluntary liquidation are not insolvent. It has not been possible to report separately on these liquidations which are included in the total number of liquidations. The legislation appropriate to liquidations and receiverships is contained in the Insolvency Act 1986 and the Insolvency (Scotland) Rules 1986.