SCOTTISH INSOLVENCIES IN THE FIRST QUARTER OF 2009/10

Statistics showing insolvencies in the first quarter of year ending 31/03/10 as published on 22 July 2009, by the Accountant in Bankruptcy. Figures are collated to 30/06/09.

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 6,294 personal insolvencies in Scotland in the first quarter of 2009/10. This figure represents an increase of 11% on the previous quarter and an increase of 33% on the same period in the previous year.

In total there were 3,730 awards of bankruptcy, showing no change from the previous quarter and an increase of 31% on the same period in the previous year.

The number of Protected Trust Deeds recorded was 2,564 in total, an increase of 30% on the previous quarter and an increase of 36% on the corresponding quarter of last year.

Insolvencies in Scotland

The individual awards of bankruptcy were broken down as follows:

• 3,012 awards were made as a result of debtor applications to the Accountant in Bankruptcy, an increase of 5% on the previous quarter and an increase of 49% on the same quarter last year. Of these, 2,394 were awarded bankruptcy through LILA **(see note)
• 620 awards resulted from petitions to the courts by creditors, a 13% decrease on the previous quarter and a decrease of 15% on the same quarter last year
• 98 awards were made as a result of petitions to the court by trustees in a trust deed. This represents a 25% decrease on the previous quarter and no change from 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. Consequently no direct comparison should be drawn between bankruptcy figures after the introduction of LILA and those reported in previous years.

Personal Insolvencies by Quarter

Financial Year		2008	/09		2009/10	Percentage 2009/10	change on Q1 on:
Quarter	Q1	Q2	Q3	Q4#	Q1	2008/09 Q4	2008/09 Q1
Awards of Bankruptcy	2,853	4,055	3,970	3,722	3,730	0%	31%
Breakdown of Awards by Source
Creditor Petitions	730	718	616	711	620	-13%	-15%
Trust Deed Petitions	98	73	103	130	98	-25%	0%
Debtor Applications	2,025	3,264	3,251	2,881	3,012	5%	49%
of which LILA	1,709	2,773	2,651	2,284	2,394	5%	40%
of which other	316	491	600	597	618	4%	96%
Protected Trust Deeds	1,882	1,943	1,837	1,971	2,564	30%	36%

# - 2008/09 Q4 Awards of Bankruptcy do not include late awards for the year. Any awards not yet recorded will be included in the 2008/09 Annual Report to be published later in the year by the Accountant in Bankruptcy.

Personal Insolvencies by Year

Financial Year	2005/06	2006/07	2007/08	2008/09	2009/10 Year to date
1 Bankruptcies 2 Protected Trust Deeds 3 Total Personal Insolvencies	5,423 7,199 12,622	5,885 8,298 14,183	6,158 7,509 13,667	14,600 7,633 22,223	3,730 2,564 6,294

(LILA route to bankruptcy introduced at start of 2008/09 financial year).

DEBTOR APPLICATIONS

The Accountant in Bankruptcy received 3,097 debtor applications for bankruptcy in the first quarter of 2009/10. At the end of the quarter 228 applications were still being processed. During the quarter 139 applications were rejected as the criteria for bankruptcy had not been demonstrated and 106 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 first quarter of 2009/10 The Accountant in Bankruptcy was appointed trustee in 3,367 cases representing 90% 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, 43% 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 316 Debt Payment Programmes approved, an increase of 15% on the previous quarter and 83% on the same quarter in the previous year.

Debt Payment Programmes by Quarter

Financial Year		2008	/09		2009/10	Percentage 2009/10	change on Q1 on:
Quarter	Q1	Q2	Q3	Q4	Q1	2008/09 Q4	2008/09 Q1
Debt Payment Programmes under the Debt Arrangement Scheme	173	213	247	275	316	15%	83%

COMPANY LIQUIDATIONS AND RECEIVERSHIPS

The Accountant in Bankruptcy received 219 notices of Scottish registered companies becoming insolvent or entering receivership in the first quarter of 2009/10. This figure includes 8 receiverships, 152 compulsory liquidations and 59 creditors' voluntary liquidations.

Company Liquidations and Receiverships

Financial Year		2008	/09		2009/10	Percentage 2009/10	change on Q1 on:
Quarter	Q1	Q2	Q3	Q4	Q1	2008/09 Q4	2008/09 Q1
Receiverships	6	12	8	6	8	33%	33%
Compulsory Liquidations	99	206	166	162	152	-6%	54%
Creditors' Voluntary Liquidations	118	71	54	63	59	-6%	-50%

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.
• 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