SCOTTISH INSOLVENCIES IN THE SECOND QUARTER OF 2009/10
Statistics showing insolvencies in the second quarter of year ending 31/03/10 are published today, 21 October 2009, by the Accountant in Bankruptcy. Figures are collated to 30/09/09.
The number of Debt Payment Programmes approved under the Debt Arrangement Scheme is also reported.
PERSONAL INSOLVENCIES
Personal insolvency data consists of both bankruptcy and Protected Trust Deed (PTD) figures.
There were 5,767 personal insolvencies in Scotland in the second quarter of 2009/10. This figure represents a decrease of 8 per cent on the previous quarter and a decrease of 4 per cent on the same period in the previous year.
In total there were 3,504 awards of bankruptcy, showing a decrease of 6 per cent on the previous quarter and a decrease of 14 per cent on the same period in the previous year.
The number of Protected Trust Deeds recorded was 2,263 in total, a decrease of 12 per cent on the previous quarter and an increase of 16 per cent on the corresponding quarter of last year.
Chart 1: Insolvencies in Scotland
The individual awards of bankruptcy were broken down as follows:
· 2,778 awards were made as a result of debtor applications to the Accountant in Bankruptcy, a decrease of 8 per cent on the previous quarter and decrease of 15 per cent on the same quarter last year. Of these, 2,106 were awarded bankruptcy through LILA **.
· 636 awards resulted from petitions to the courts by creditors, a 3 per cent increase on the previous quarter and a decrease of 13 per cent on the same quarter last year
· 90 awards were made as a result of petitions to the court by trustees in a trust deed. This represents an 8 per cent decrease on the previous quarter and an 8 per cent increase on the same quarter last year
** The Low Income, Low Asset (LILA) route into bankruptcy allows people who meet the relevant criteria to apply for their own bankruptcy without proving apparent insolvency or having creditor concurrence. The Bankruptcy and Diligence etc. (Scotland) Act 2007 introduced the LILA route and has widened access to bankruptcy and consequently no direct comparison should be drawn between bankruptcy figures after the introduction of LILA and those reported in previous years.
Table 1: Personal Insolvencies by Quarter
| | | | | | Percentage | Change |
| Financial Year | 2008 | /09(r) | | 2009 | /10(p) | 2009/10 | Q2 on: |
| Quarter | Q2 | Q3 | Q4 | Q1 | Q2 | 2009/10 Q1 | 2008/09 Q2 |
| Award of Bankruptcy | 4,077 | 3,996 | 3,722 | 3,730 | 3,504 | -6% | -14% |
| | | | | | | |
| Breakdown of awards by source | | | | | | | |
| Creditor Petitions | 730 | 622 | 759 | 620 | 636 | 3% | -13% |
| Trust Deed Petitions | 83 | 123 | 132 | 98 | 90 | -8% | 8% |
| | | | | | | |
| Debtor Applications | 3264 | 3251 | 2881 | 3012 | 2778 | -8% | -15% |
| of which LILA | 2773 | 2651 | 2284 | 2394 | 2106 | -12% | -24% |
| of which other | 491 | 600 | 597 | 618 | 672 | 9% | 37% |
| | | | | | | |
| Protected Trust Deeds | 1943 | 1837 | 1971 | 2564 | 2263 | -12% | 16% |
r - Q2, Q3, and Q4 for 2008/09 contain revised figures for Awards of Bankruptcy due to late notification of awards which resulted from Creditor Petitions and from Trust Deed Petitions. The late awards have been attributed to the relevant quarter in which they occurred. This impacts on previously published quarterly figures for creditor and trustee petitions. Debtor applications are not affected by this change.
p - Figures for 2009/10 will remain provisional until validation at the end of the financial period.
Table 2: Personal Insolvencies by Year
| Financial Year | 2005/06 | 2006/07 | 2007/08 | 2008/09 | 2009/10 |
| | | | | Year to Date |
| 1. Bankruptcies | 5423 | 5885 | 6158 | 14777(r) | 7234 |
| 2. Protected Trust Deeds | 7199 | 8298 | 7509 | 7633 | 4827 |
| 3. Total Personal Insolvencies | 12622 | 14183 | 13667 | 22410 | 12061 |
r - The total bankruptcies for 2008/09 is a revised end-of-year figure following late notification of awards which resulted from Creditor Petitions and from Trust Deed Petitions.
Note: LILA route to bankruptcy introduced at start of 2008/09 financial year.
DEBTOR APPLICATIONS
The Accountant in Bankruptcy received 3,023 debtor applications for bankruptcy in the second quarter of 2009/10. At the end of the quarter 258 applications were still being processed. During the quarter 160 applications were rejected as the criteria for bankruptcy had not been demonstrated and 56 were returned due to the application being on the incorrect form.
CASE ADMINISTRATION
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. For the second quarter of 2009/10 the Accountant in Bankruptcy was appointed trustee in 3,122 cases representing 89 per cent of bankruptcies for the quarter.
The Accountant in Bankruptcy is trustee in all bankruptcies awarded through LILA. Of the remaining awards where the Accountant has been appointed trustee, 34 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.
DEBT ARRANGEMENT SCHEME
During the quarter there were 310 Debt Payment Programmes approved, a decrease of 2 per cent on the previous quarter and an increase of 46 per cent on the same quarter in the previous year.
Table 3: Debt Payment Programmes by Quarter
| | | | | | Percentage | Change |
| Financial Year | 2008 | /09 | | 2009 | /10 | Q2 | on: |
| Quarter | Q2 | Q3 | Q4 | Q1 | Q2 | 2009/10 Q1 | 2008/09 Q2 |
Debt Payment Programmes under the Debt Arrangement Scheme | 213 | 272 | 275 | 316 | 310 | -2% | 46% |
COMPANY LIQUIDATIONS AND RECEIVERSHIPS
Receiverships and liquidations are of companies registered in Scotland and recorded in the Register of Insolvencies (RoI).
The Accountant in Bankruptcy received 181 notices of Scottish registered companies becoming insolvent or entering receivership in the second quarter of 2009/10. This figure includes 16 receiverships, 116 compulsory liquidations and 49 creditors' voluntary liquidations.
Accountant in Bankruptcy has reviewed the collection of data for company liquidations. Figures for 2008/09 are based on the registration of notice of the appointment of liquidator, including provisional liquidators. The figure for 2009/10, including the revised figure for quarter 1, are based on court orders for compulsory liquidations. Consequently, the revised figures are a more accurate statement of compulsory liquidations recorded in the RoI. However, the figure for 2009/10 should not be directly compared with the published figures for 2008/09.
Further to this, the Accountant in Bankruptcy is now able to report on members' voluntary liquidations for the 2009/10 financial period.
Table 4: Company Liquidations and Receiverships
| | | | | | Percentage | Change |
| Financial Year | 2008 | /09 | | 2009 | /10 | 2009/ | 10 Q2 on: |
| Quarter | Q2 | Q3 | Q4 | r Q1 | Q2 | 2009/10 Q1 | 2008/09 Q2 |
Receiverships | 12 | 8 | 6 | 8 | 16 | 100% | 33% |
Compulsory Liquidations | 206 | 166 | 162 | 118 | 116 | -2% | - |
Creditors' Voluntary Liquidations | 71 | 54 | 63 | 58 | 49 | -16% | -31% |
| Total Corporate Insolvencies | 289 | 228 | 231 | 184 | 181 | -2% | - |
| Members' Voluntary Liquidations | - | - | - | 42 | 40 | -5% | - |
r - Q1 of 2009/10 contains revised figures for Compulsory Liquidations and for Creditors' Voluntary Liquidations.
Notes
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. The 1985 Act was amended by the Bankruptcy (Scotland) Act 1993 and 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 in Scotland. Changes included the introduction of LILA, a 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 up 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 Debt Arrangement Scheme (DAS) is administered by the Accountant in Bankruptcy. Debt Payment Programmes approved under DAS allow individuals to repay their debts in full over an extended period of time whilst providing protection from enforcement by their creditors and safeguarding their home as long as mortgage payments are maintained. The legislation relating to DAS is contained in the Debt Arrangement and Attachment (Scotland) Act 2002 and subsequent regulations. A consultation is currently ongoing seeking respondents views on improving access to DAS. This consultation may be accessed at www.scotland.gov.uk/Consultations/Current
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. Further information on DAS, including a register of DPPs, is available at www.moneyscotland.gov.uk
Further information regarding insolvency in Scotland, including legislation, can be found on the Accountant in Bankruptcy website at www.aib.gov.uk
Accountant in Bankruptcy
21 October 2009