Scottish Insolvencies in the Fourth Quarter of 2009/10

Accountant in Bankruptcy (AiB) report a 32 per cent rise in corporate insolvencies between January and March of this year while personal insolvencies dropped by 9 per cent drop over the same period.

The latest official Scottish figures released today, 7 May 2010, show 5175 personal insolvencies and 282 notices of Scottish registered companies becoming insolvent or entering receivership in the fourth quarter of 2009/10.

Rosemary Winter-Scott, The Accountant in Bankruptcy , said:

"The increased number of company insolvencies reported in the last quarter may be an indication that Scottish businesses are experiencing difficulties but it is too soon to assume a trend. AiB will continue to report on developments."

"We are however very pleased to report a continued drop in the number of personal insolvencies for the third quarter in a row. This reflects the commitment by the Scottish Government and debt and insolvency service partners to make sure that those who need help can access it at the right time and at the right level for their circumstances. The introduction of the LILA route in April 2008, offered much needed access to debt relief for those who previously had no other option. Following an initial influx of applications we are finally seeing numbers fall."

"To echo Mr Ewing's comment's on the last period, the Scottish Government is doing absolutely everything we can to support Scottish businesses and families during these difficult times. The Home Owner and Debtor Protection (Scotland) Act 2010, which comes into force this year, will see greater protection and help for people at risk of losing their homes by ensuring lenders take reasonable steps to avoid repossession."

Statistics in brief:

> 3,142 were awards of bankruptcy; 6 per cent down on the previous quarter and a 17 per cent drop on the same period in the previous year.

> 2,033 were Protected Trust Deeds; down 13 per cent on the previous quarter and up 3 per cent on the corresponding quarter of last year.

> 2,483 awards were the result of debtor applications to AiB; down 14 per cent on the previous quarter and up 4 per cent on the same quarter last year. Of these, 1,905 were awarded bankruptcy through LILA.

> 570 awards resulted from petitions to the courts by creditors; an 11 per cent decrease on the previous quarter and a decrease of 25 per cent on the same quarter last year

> 89 awards were made as a result of petitions to the court by trustees in a trust deed. This represents a 33 per cent decrease on the previous quarter and a 33 per cent decrease on the same quarter last year.

> 417 Debt Payment Programmes approved; up 10 per cent on the previous quarter and 52 per cent up on figures for the same quarter in the previous year.

> 282 notices of Scottish registered companies becoming insolvent or entering receivership; up 32 percent of last quarter.

A full statement of Scottish insolvency statistics for the fourth quarter of 2009/10 is now available.

Notes

• Personal insolvency data consists of both bankruptcy and Protected Trust Deed (PTD) figures.

• 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. A Protected Trust Deed is not a bankruptcy.

• 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.

• Company Liquidations and Receiverships figures are for companies registered in Scotland. Corporate insolvency figures for 2008/09 are based on the registration of notice of the appointment of liquidator, including provisional liquidators. The figure for 2009/10 is based on court orders for compulsory liquidations. Consequently, the 2009/10 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.

• Details of bankruptcies, PTDs, liquidations and receiverships are found on the Register of Insolvencies, which is maintained by 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 by navigating the tabs above.