What Are Bankruptcy Restrictions?

Bankruptcy Restrictions were introduced by legislation on 1 April 2008 and impose certain restrictions on a debtor where there has been a level of misconduct by the debtor either before or after the date of bankruptcy, as described in section 56B of the Bankruptcy (Scotland) 1985 Act. The restrictions remain in force after the date of discharge for periods varying between two and 15 years, depending upon the severity of the misconduct.

Bankruptcy Restrictions were introduced for the purpose of deterring debtors from misbehaving or being dishonest before or during their bankruptcy and to provide businesses and creditors with a level of protection from such debtors once their bankruptcy had ended. A Bankruptcy Restriction Order (BRO) or Bankruptcy Restriction Undertaking (BRU) can help to ensure that those who choose to abuse the bankruptcy process, either before or during their bankruptcy, face the consequences of their actions and this can include an appearance in front of a Sheriff if a BRO application is made against them.

Only the Accountant in Bankruptcy (AiB) can grant a BRU, or submit a BRO application to court. However, all trustees of bankruptcies have a responsibility to report any suspect misconduct by a debtor to AiB, for investigation.

If AiB believes there are sufficient grounds for making a BRO application to a Sheriff, the debtor will be informed. If the debtor then wishes, they can voluntarily agree to sign a BRU rather than allow the matter to go before a Sheriff. A BRU applies the same restrictions to the debtor as a BRO, but AiB may agree to the debtor signing a BRU for a shorter period of time than the BRO would be for. If the debtor breaches the terms of their BRU or BRO, the matter will be brought before a Sheriff for action.