Register of InsolvenciesThe register of insolvencies is a statutory register about the insolvency of individuals and businesses in Scotland. Go to the register
Press release: seven–year Order for bankrupt businessman
Press release: seven–year Order for bankrupt businessman25 May 2012
Scotland’s insolvency service, Accountant in Bankruptcy (AiB), has secured a seven-year Bankruptcy Restrictions Order (BRO) on a businessman from Ayr, placing serious financial limitations on him until 2019.
Joseph Nelson was declared bankrupt on 26 May 2011 after his business, Nelson Civil Engineering, ran into financial difficulties. Despite having knowledge of his impending bankruptcy, Mr Nelson sold assets, namely six different motor vehicles, without disclosing the funds or information to his trustee therefore preventing his creditors from receiving any money from these sales. Mr Nelson had no legal right to sell the vehicles which formed part of his estate.
Sheriff Montgomery at Ayr Sheriff Court found that Mr Nelson’s misconduct merited a seven-year Order on the grounds of ‘failure to account’ and ‘failure to co-operate with the trustee’, both of which contravene debtors’ obligations during the period of bankruptcy. The Sheriff also heard how Mr Nelson had six different bank accounts, despite only declaring two to his trustee. The level of his debt at the time of his bankruptcy was over £1.2 million.
Evidence showed that Mr Nelson had failed to keep his trustee advised of changes of address and his financial circumstances during the administration of his bankruptcy. Following further investigation by AiB’s Bankruptcy Restrictions Team, it was discovered that Mr Nelson had frequently travelled abroad to the South of France and Spain where he was named as the sole director of a company and had property in his name, which he had not informed his trustee about. The conditions of the BRO mean that Mr Nelson is not permitted to hold a post as company director and his access to credit is likely to be seriously restricted for the period of the BRO.
AiB Chief Executive, Rosemary Winter-Scott said:
“Bankruptcy brings with it severe consequences and also important responsibilities for debtors – including the obligation to fully disclose details of assets and financial affairs to the trustee. Bankruptcy Restrictions Orders and Undertakings are central to protecting not only the bankruptcy process, but the people and organisations owed money who suffer financially from irresponsible or unscrupulous behaviour. They also alert potential future creditors and employers that an individual has demonstrated inappropriate behaviour before or during their bankruptcy and may therefore be unsuitable for future credit or certain types of employment.”
Mr Nelson did not contest the BRO application.
- Debtor details: Joseph Nelson of Doonfoot, Ayr. Mr Nelson was awarded bankruptcy on 26 May 2011. The details of the case are recorded in the Register of Insolvencies, which can be accessed by the public, free of charge
- The Bankruptcy Restrictions Order (BRO) was imposed on Mr Nelson on 10 May 2012 at Ayr Sheriff Court and is for the following misconduct, as described under Section 56B of the Bankruptcy (Scotland) Act 1985:
- Failure to account
- Failure to co-operate with the trustee
Full details of the Bankruptcy (Scotland) Act 1985 are available online
- BROs were introduced by in 2008 to offer protection to creditors and businesses and impose certain restrictions on debtors who act inappropriately either before or during bankruptcy. There are various types of behaviour which can lead to a BRO, including gambling, extravagance, speculation and failing to co-operate with the trustee. The restrictions can apply for between two and 15 years after bankruptcy.
- The role of a trustee is to administer an individual’s bankruptcy case by realising a debtor’s assets (ingather funds) to ensure the best return for creditors.
- AiB is an Executive Agency of the Scottish Government with responsibility for administering the process of personal bankruptcy, administering the Debt Arrangement Scheme and recording corporate insolvencies in Scotland. AiB’s mission is to ‘ensure access to fair and just processes of debt relief and debt management for the people of Scotland, which takes account of the rights and interests of those involved.’
- AiB is responsible for BRO investigations. Where potential misbehaviour is identified, AiB is required to apply to a sheriff for the imposition of a BRO. The sheriff’s decision is made after consideration of the evidence at a court hearing.