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Press Release: Scottish insolvencies for third quarter 2011-12

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Press Release: Scottish insolvencies for third quarter 2011-12

   25 January 2012

Official figures released by Accountant in Bankruptcy (AiB) today report 4,664 Scottish personal insolvencies in the third quarter of 2011-12 – down 13 per cent compared to the previous quarter and up 2 per cent from the same period of the previous year.
 
Personal insolvency data includes awards of bankruptcy, which are down for a second successive quarter, dropping 8 per cent between quarter 2 and quarter 3, as well as protected trust deeds which have gone down by 19 per cent compared to this year’s previous quarter and down 2 per cent on the same quarter of last year. However both bankruptcies and total personal insolvencies are higher in quarter 3 of 2011-12 than the corresponding quarter of last year, increasing by 5 per cent and 2 per cent respectively, potentially indicating that it is still a challenging time for Scotland’s debtors.
 
There has been continued growth in debt payment programmes approved through the Debt Arrangement Scheme (DAS). Figures for DAS show that the number of people successfully applying to manage and repay their debts through the Scheme has slightly increased by 3 per cent from the previous quarter and has doubled from the same period of last year.  Access to and awareness of the debt management tool and its benefits have resulted in an expected increase in cases since DAS was improved and re-launched back in July 2011.
 
Minister for Energy, Enterprise and Tourism, Fergus Ewing, who has responsibility for personal insolvency and debt management in Scotland said:

“Personal insolvencies have gone down significantly this quarter as both bankruptcies and protected trust deeds have decreased, the latter by nearly one-fifth. It is encouraging to see that bankruptcies have fallen for the second successive quarter. Likewise, the 22 per cent drop in corporate insolvencies compared to last quarter is positive news. However it remains a challenging time for Scotland’s debtors as personal insolvencies are still slightly up on the equivalent period last year.
 
“It’s important to see that there has been a continued increase in debt payment programmes approved under the Debt Arrangement Scheme, following AiB’s ongoing efforts to raise awareness of improvements made to the Scheme in July last year. DAS allows people to repay their debt over an extended period of time and both debtors and creditors benefit from this less severe alternative to bankruptcy. The number of people in Scotland choosing DAS has doubled compared to this time last year, meaning that more of those struggling with debt are seeking advice at an earlier stage and choosing a debt solution appropriate to their circumstances.”
 
Statistics in brief:
 
  • 4,664 personal insolvencies in Scotland in the third quarter of 2011-12: a 13 per cent decrease on the previous quarter and 2 per cent increase on the same period in the previous year.

  • 2,615 awards of bankruptcy, a decrease of 8 per cent on the previous quarter and an increase of 5 per cent on the same period in the previous year. These can be broken down as:
    - 2,221 awards were made as a result of debtor applications to AiB; a decrease of 5 per cent on the previous quarter and an increase of 15 per cent on the same quarter last year. Of these, 1,080 were awarded bankruptcy through the Low Income Low Asset (LILA) route while 786 debtors were awarded bankruptcy through the Certificated route to bankruptcy - a 2 per cent increase on the previous quarter
    -     363 awards resulted from petitions to the courts by creditors; down 16 per cent from the previous quarter and a decrease of 26 per cent on the same quarter last year
    - 31 awards were made as a result of petitions to the court by trustees in a trust deed; a 56 per cent decrease on the previous quarter and a 59 per cent decrease on the same quarter of last year

  • 878 debt payment programmes were approved through the Debt Arrangement Scheme, an increase of 3 per cent on the previous quarter and an increase of 100 per cent on the same quarter in the previous year.

  • AiB received 280 notices of Scottish registered companies becoming insolvent or entering receivership in the third quarter of 2011-12. This figure includes 8 receiverships, 203 compulsory liquidations, and 69 creditors voluntary liquidations. There were also 55 members’ voluntary liquidations.
 
Background
  • The full statement of Scottish insolvencies statistics for the third quarter of 2011-12 is available online

  • AiB 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 removed a number of processes from the Scottish Court system, reducing costs and freeing up court time.

  • PTDs are voluntary arrangements, where the debtor passes their 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 AiB. Debt payment programmes approved under DAS allow individuals to repay their debts in full over an extended period of time while providing protection from enforcement by their creditors and safeguarding their home as long as mortgage payments are maintained. Further information on DAS, including a register of DPPs, is available at the DAS Scotland website 

  • Details of bankruptcies, PTDs, liquidations and receiverships are found on the Register of Insolvencies which is maintained by AiB
     
  • AiB is also responsible for receiving, extracting and recording information from certain forms relating to company liquidations and receiverships. Legislation on liquidations and receiverships is contained in the Insolvency Act 1986 and the Insolvency (Scotland) Rules 1986.

  • Further information regarding insolvency in Scotland, including legislation, can be found on the Accountant in Bankruptcy website