Welcome

Welcome to the fourth edition of our e-bulletin. Please take time to read the Bulletin and to bring it to the attention of relevant individuals within your organisation.

The Bulletin has been running for 9 months now and we would really appreciate your feedback so that we may gauge its effectiveness. We have attached voting buttons to the e-flyer for this edition and would ask that you use these to indicate whether you would like us to continue issuing the bulletin or not. If you decide not to vote we will assume that you do not want us to continue issuing the bulletin.

Don't forget, you can contact us at any time to offer further feedback or ideas for topics.

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Trustee & Agent News

Agents and Trustees should note that Section 52 (2) (a) of the Bankruptcy (Scotland) Act 1985, as revised 2007, states "the first accounting period shall be the period of 12 months beginning with the date on which sequestration is awarded". Please note that there is no provision to allow any variation to the first account period, even if a dividend could be paid to creditors from funds held. Subsequent accounting periods shall be yearly, beginning with the end of the last account period. It would be good practice and cost effective for all parties if Trustees and Agents could advise, when submitting an account, when they expect the next account period to end.

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Agent News

We apologise for conflicting information which has previously been forwarded regarding the date a J2A should be submitted.

Please note that a J2A should be completed and forwarded for payment 6 months from the date of bankruptcy (warrant to cite date), when a creditor's petition has been awarded. If a debtor's petition has been granted, the relevant date is 6 months from the date of the award of bankruptcy.

The Bankruptcy Fees (Scotland) Regulations 1993 were amended for accounts ending on or after 1 April 2009. Agents should note, Paragraph 4 states that outlays payable to The Accountant in Bankruptcy now include the payment made under section 1B(4) of the 1985 Act, of a fee to a person appointed by The Accountant in Bankruptcy under section 1B(2) of that Act, to perform any of The Accountant's functions as interim Trustee or Trustee. In effect, this means that The Accountant in Bankruptcy will now recover the total amount of fees paid to Agents.

View the new Bankruptcy Fee rates here.

Where a legal agent has been working on behalf of the bankrupt estate, please contact either Anderson Strathern or Harper MacLeod and ensure that the final legal fee has been invoiced to and paid by AiB before submitting the final or penultimate account.

Alternatively, in a penultimate account, confirm the final amount to be invoiced under "final outlays", and provision can be made in the scheme of division calculation.

There have been a few occasions where an invoice has been submitted from the legal agent after the scheme of division has been calculated and the funds distributed to creditors, leaving the public purse not fully reimbursed.

NB the above information may not relate to cases which have been allocated under the new contract.

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Trustee News

In the February newsletter we advised that consideration was being given to the provision in the Scheme of Division in respect of the Trustee's fee to close. In most cases we do not receive a breakdown of how the estimated remuneration has been calculated. Although it is current practice to issue an advance determination of the Trustee's estimated fee, Bankruptcy legislation does not support this.

In order to regularise this process it has been decided that, although a provision for the fee to close should still be included in the Scheme of Division, it will not be determined until the final account is submitted.

When submitting a Scheme of Division, Trustees should include a summary of the work included in the estimated fee to close, e.g. 3 hours cashiering, 2 hours circulars. As the work involved in preparing the Scheme of Division following the adjudication of claims will be included in the remuneration claim, it is considered that the hours required to close would be 10 or less. A SIP 9 should be submitted with the final account but if the hours incurred exceed that which was previously agreed, a detailed explanation should be provided.

Similarly, provision in respect of closing outlays and the final audit fee should still be included in the Scheme of Division but will not be determined until the final account is received.

This process will be applied to all final Schemes of Division received on or after 31 May 2009.

If you have any questions regarding the above please contact Val Cavin

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Guest Articles

Trustees will be aware that we have had some technical problems with the email address given in the Dear Trustee letter, issued on 12 December 2008, regarding the use of Appendix L. These issues have now been resolved, and Appendix Ls can be submitted directly to the Correspondence Team.

Agents and Trustees can also use this email address for general correspondence. We will endeavour to reply within our usual target timescale of 10 working days.

I refer to our Dear Trustee letter of 7 April 2009 and remind Trustees of their statutory responsibility to submit their Protected Trust Deed annual accounts, Form 4s and Supervision fees, timeously, to the Agency on an annual basis. A number of Trustees are now overdue with their Form 4s and reminder letters are being issued. All Trustees should ensure they have prepared accounts from the date on which the Trust Deed was granted and send a copy of these accounts to AiB with the Form 4.

If you have any questions regarding the new rules governing our supervision of PTDs, please contact Jennifer Parsons on 0845 612 6522

Since the new provisions set out in sections 56A to 56J of the Act came into force on 01 April 2008 in relation to inappropriate conduct by debtors, only 7 submissions have been made by our Agents to The Agency requesting that investigations be undertaken. Of those 5 had to be rejected due to insufficient information being provided and only 2 have resulted in active investigations.

In this regard we would remind our Agents that they should consider BRO/BRUs as part of their administration of the cases and that in terms of duty 5A there is a responsibility, where there is reason to believe that an investigation is required into the conduct of a debtor, to submit a report to The Agency using the template provided at Appendix K to the Notes for Guidance.

Investigations which have been completed in recent months, as a result of requests by in house staff, have resulted in Bankruptcy Restriction Undertakings being accepted from debtors for periods between 2 and 5 years, the misconduct relating to areas such as fraud, online gambling and concealment of assets.

Should you or your staff wish to discuss any potential submissions on an informal basis or require any assistance with the completion of the report template please contact Derek Smillie or Gillian Boyd on 0845 6126 474

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The Accountant's Information Bulletin is produced by the Accounts and Supervision Teams, Case Operation Branch, AiB, for the benefit of Agents and Trustees working with the Agency. All information presented here was true and accurate at the time of publication.