A breakdown of the LILA anomalies are reported and Bankruptcy Restriction Order (BRO) submissions made to the Bankruptcy Restrictions Team during the first year of operation of the new legislation.
The principal areas of alleged misconduct reported were non co-operation, fraud, gratuitous alienation [1], unfair preference and incurring further debt during the sequestration.
Statistics for 2008-09
LILA anomalies reported LILA investigations - No Further Pro LILA Investigations - Action taken LILA pending at year end BRO submissions (in house) [2] BRO submissions (agents) [3] BRO submissions (trustees) [4] BRO investigations-No Further Pro BRO investigations - Other action BRUs accepted BROs granted by Courts BROs pending at year end | 31 16 11 4 21 7 0 16 4 4 0 4 |
[1] gratuitous alienation - the transfer of a property by the owner to another person without adequate payment or other consideration.
[2]in-house: Bankruptcy cases where AiB is the trustee and the case is administered 'in-house' by AiB staff.
[3]agents: Bankruptcy cases where AiB is the trustee but the cases have been allocated to agents, Insolvency Practitioners, to administer on AiB's behalf.
[4]trustees: Bankruptcy cases where an Insolvency Practitioner is the trustee.
LILA Anomalies - Action taken
As a result of the investigations undertaken in these cases: --
- five LILA cases were invesigated after assets were identified which merited further enquiry.
- two cases merited investigation under the terms of BRO submissions, however there was insufficient evidence available to proceed further with an BRU or BRO.
- In the remaining four cases BRO submissions were recieved which resulted in BRUs being accepted from the four debtors concerned.
BRO investigations - No Further Procedure
In relation to the cases where there was no further procedures: -
- five agents cases were rejected without investigation as there was no evidence that the debtor had an awareness of their obligation to co-operate with their trustee.
- one case was fully investigated but there was insufficient evidence to proceed with a BRO.
- two AiB in-house case submissions were rejected without investigation, one due to the fact that the debtor died shortly after the submission was made and the other due to the fact that there was no evidence that the debtor had been made aware of their obligation to co-operate with their trustee after the award was made.
- eight in-house case were fully investigated, however insufficient evidence was found to present to the court for BRO purposes
BRO investigations - Other Action
As a result of the investigations undertaken in these cases, all of which were in house cases: --
- One case established sufficient evidence to merit a BRU/BRO. However due to an anomaly having been identified in the LILA procedure, which has now been rectified, only a written warning could be issued to the debtor on this occasion.
- In two cases additional assets were identified, this information was passed to the bankruptcy case officer for them to take appropriate action.
- In the remaining case a concealed asset (an inheritance of approx £40,000) was identified. As a result the debtor fully co-operated, the money was recovered for the benefit of creditors and a decision was made to take no further action against him.
Bankruptcy Restrictions Undertakings
The following, all of which were in house cases, are details of the BRUs which were accepted from debtors, which removed the need to make BRO application to the courts.
1. On the 06 January 2009 a BRU was signed by a debtor from Hurlford in Ayrshire for a period of three years. The misconduct in respect of which it related was a gratuitous alienation in the sum of £5000, concealment of a bank account and failure to disclose assets, in terms of the grounds stated in s 56B(2)(c), (l) and (m) of the Bankruptcy (Scotland) Act 1985. as amended, (the Act)
2. On the 19 January 2009 a BRU was signed by a debtor from Falkirk for a period of 30 months. The misconduct it related to was online gambling in terms of the grounds stated in s 56B(2)(j) of the Act.
3 & 4. On the 11 March 2009 BRUs were signed by a married couple from Baillieston in Glasgow, for periods of four years each. The misconduct it related to was concealing a property asset which had equity in excess of £50,000 and failure to disclose the asset in their bankruptcy applications, in terms of the grounds stated in s 56B(l) and (m) of the Act.