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Latest insolvency statistics
21/01/2009
Statistics showing insolvencies in the third quarter of year ending 31/3/09 are published today, January 21, 2009, by the Accountant in Bankruptcy. Figures are collated to 31/12/08.
INDIVIDUAL INSOLVENCIES
There were 5807 individual insolvencies in Scotland in the third quarter of this year. This represented a decrease of 3 per cent on the previous quarter and an increase of 75 per cent on the same period in the previous year.
In the total there were 3970 bankruptcies, a decrease of 2 per cent on the previous quarter. As expected there was a large percentage rise on the corresponding quarter of 2007-08. This amounted to 154 per cent and is attributable to the introduction of the "Low Income, Low Asset" (LILA) route into bankruptcy. Protected Trust Deeds (PTDs) totalled 1837, a decrease of 5 per cent on the previous quarter and an increase of 5 per cent on the corresponding quarter of last year.
Total Insolvencies by Year
- Figures for 2005-06 and 2006-07 are taken from the respective annual reports.
- Low Income, Low Assets (LILA) route to bankruptcy introduced at start of 2008-09 financial year.
LILA is a new route into bankruptcy and consequently no direct comparison should be drawn between figures in the current year against figures reported on in previous years. A full review of LILA will be conducted one year after its introduction.
As in the previous two quarters of 2008-09, 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.
There were 3035 debtor applications received by the Accountant in Bankruptcy in the third quarter of 2008-09. Of these, 2651 individuals were awarded bankruptcy because they met the LILA criteria and 600 were awarded bankruptcy through apparent insolvency. At the end of the quarter, there were 310 applications still being processed and 135 applications had been rejected or returned. Petitions to the courts by creditors resulted in 616 bankruptcies for the quarter, a decrease of 14 per cent on the previous quarter and a decrease of 25 per cent on the corresponding quarter of last year. There were also 103 awards as a result of petitions by trustees in a trust deed.
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 9850 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, 35 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.
Personal Insolvencies by Quarter
- 2007-08 Q4 Awards of Bankruptcy absorb 49 late awards made and not previously counted in the year.
- Revised quarterly figures. Annual totals are not affected.
COMPANY LIQUIDATIONS AND RECEIVERSHIPS
The Accountant in Bankruptcy received 228 notices of Scottish companies entering liquidation or receivership in the third quarter of 2008-09. This figure includes 8 receiverships, 166 compulsory liquidations and 54 creditors' voluntary liquidations.
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 1 April 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. The changes 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. The legislation appropriate to liquidations and receiverships is contained in the Insolvency Act 1986 and the Insolvency (Scotland) Rules 1986.
Details of bankruptcies, PTDs, liquidations and receiverships are found on the register of insolvencies, which is maintained by the Accountant in Bankruptcy (AiB).