SCOTTISH INSOLVENCIES IN THE FIRST QUARTER OF 2008/09

Statistics showing insolvencies in the first quarter of financial year 2008/09 were published on 17 July 2008 by the Accountant in Bankruptcy.

INDIVIDUAL INSOLVENCIES

There were 4,735 individual insolvencies in Scotland in the first quarter of this financial year. This was an increase of 44.6% on the previous quarter and an increase of 35.4% on the same period a year ago.

This was made up of 2,853 bankruptcies, an increase of 104.5% on the previous quarter and an increase of 78.3% on the corresponding quarter of the previous year, and 1,882 Protected Trust Deeds (PTDs), virtually no change on the previous quarter and a decrease of 0.5% on the corresponding quarter of last year.

The increase in bankruptcies is predominately as a result of the introduction on 1 April 2008 of a new route into bankruptcy for people on low income and low assets, who previously could not make themselves bankrupt. The Bankruptcy and Diligence etc. (Scotland) Act 2007, introduced this new route, whereby people who meet certain criteria can apply for their own bankruptcy without proving apparent insolvency, where a creditor takes court action to recover a debt due. Previously without legal action against them, a debtor could not establish apparent insolvency and was therefore not entitled to apply for their own bankruptcy.

Of the 2,927 debtor applications, the Accountant in Bankruptcy received in the first quarter of 2008/09, there were 1,709 individuals who met the low income, low asset (LILA) criteria and 414 who had proof of apparent insolvency and were awarded bankruptcy during the quarter. There are 725 applications still being processed, with 79 applications being rejected or returned. There were also 730 creditor petitions which awarded bankruptcy during the quarter, a decrease of 3.1% on the previous quarter and a decrease of 15% on the corresponding quarter of last year.

Had the LILA route to bankruptcy not been introduced there would have been a decrease of 25.5% compared to last quarter, in the number of debtors applying for bankruptcy in the first quarter of 2008/09, and a decrease of 36% compared to the corresponding quarter of last year.

COMPANY LIQUIDATIONS AND RECEIVERSHIPS

There were 223 notices of Scottish companies going into liquidation or receivership in the first quarter of 2008/09. This was an decrease of 37% on the previous quarter and a decrease of 9% on the same period a year ago.

Insolvency Numbers overview for Q1 of 2008/09

Notes

Insolvent individuals in Scotland are subject to sequestration (bankruptcy) or Protected Trust Deeds (PTDs) under the Bankruptcy (Scotland) Act 1985 (as amended). 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 on the new route into bankruptcy for people on 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, whereby 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. Details of bankruptcies and PTDs are found on the register of insolvencies, which is maintained by the Accountant in Bankruptcy (AiB). Further information about insolvency in Scotland, including all the legislation, can be found on the AiB's website at www.aib.gov.uk