Notes for Guidance - Bankruptcy (Scotland) Act 2016 (as amended)

A trustee is given power to enter into any contract which they consider would be beneficial for the administration of the debtor’s estate under section 110(11) of the Act.

The trustee has an option as to whether or not they adopt a contract entered into by the debtor prior to bankruptcy, unless its terms and nature preclude adoption, i.e. delectus personae - a contract for the personal services of the debtor, or if the contract expressly excludes assignation.

It should be noted the trustee can be vested in rights under a contract, without the need to adopt that contract, even if - as is the case with some pension scheme policies - it excludes assignees. If they decline to adopt, the other party may have a claim for damages in the bankruptcy.

If the trustee does adopt the contract they incur personal liability in relation to it, subject to a right of relief against the estate, or unless criterion is whether or not adoption would be beneficial to the administration of the debtor’s estate under section 110(1) of the Act.

The trustee shall within 28 days of receipt of a request, in writing, from any party to a contract entered into by the debtor, adopt or refuse to adopt the contract.

When the trustee does not reply in writing to a request within the relevant period the trustee is deemed to have refused to adopt the contract.

When the trustee fails to make a decision within the relevant period they may apply to the Accountant for permission to extend this period under section 212 of the Act (see section 18.3).