Quarter 4 Insolvency Statistics 2010/11

Statistics showing insolvencies in the fourth quarter of year ending 31/03/11 are published today, 20 April 2011, by the Accountant in Bankruptcy. Figures are collated to 31 March 2011.
 
The number of Debt Payment Programmes approved under the Debt Arrangement Scheme (DAS) is also reported. 
 

PERSONAL INSOLVENCIES

 
Personal insolvency data consists of both bankruptcy and Protected Trust Deed (PTD) figures.
 
There were 4,262 personal insolvencies in Scotland in the fourth quarter of 2010/11. This figure represents a decrease of 7 per cent on the previous quarter and a decrease of 18 per cent on the same period in the previous year.
 
In total there were 2,687 awards of bankruptcy, an 8 per cent increase on the previous quarter and a decrease of 15 per cent on the same period in the previous year.
 
The number of Protected Trust Deeds recorded was 1,575 in total, a decrease of 25 per cent on the previous quarter and a decrease of 23 per cent on the corresponding quarter of last year.
 

Chart 1: Insolvencies in Scotland

 Table of Insolvency Statistics for Quarter 4 of 2010/11

The individual awards of bankruptcy were broken down as follows:
 
  • 2,173 awards were made as a result of debtor applications to the Accountant in Bankruptcy, an increase of 8 per cent on the previous quarter and a decrease of 15 per cent on the same quarter last year. Of these, 1,204 were awarded bankruptcy through LILA.
  • 446 awards resulted from petitions to the courts by creditors, a decrease of 8 per cent on the previous quarter and a decrease of 25 per cent on the same quarter last year.
  • 68 awards were made as a result of petitions to the court by trustees in a trust deed. This represents a 7 per cent decrease on the previous quarter and a 24 per cent decrease on the same quarter last year.
 
Note: The new Certified route into bankruptcy commenced on 15 November 2010. For the fourth quarter of 2010/11, 555 debtors were awarded bankruptcy who would otherwise have been unable to qualify. A revised Debtor Application form was also introduced on 15 November 2010 with a number of changes including an evidence requirement and dispensing with the need to issue Form 17 prior to award through LILA.  Providing all information is provided this should speed up the award process and deliver debt relief quicker.
 

Table 1: Personal Insolvencies by Quarter  

Financial Year 2009/10 2010/11 (p2)   Percentage change          2010/11 Q4 on:
Quarter Q4 Q1 Q2 Q3 Q4 2010/11 Q3 2009/10 Q4
Awards of Bankruptcy 3,167 3,139 3,092 2,493 2,687 8% -15%
               
Breakdown of awards by source              
Creditor Petitions 594 562 756 487 446 -8% -25%
Trust Deed Petitions 90 77 112 73 68 -7% -24%
               
Debtor Applications 2,483 2,500 2,224 1,933 2,173 12% -12%
of which LILA 1,905 1,897 1,631 1,368 1,204 -12% -37%
of which other 578 603 593 565 969 72% 68%
               
Protected Trust Deeds 2,033 2,239 2,076 2,090 1,575 -25% -23%

p2 - Figures for 2010/11 will remain provisional until validation following the end of the financial year. 

Table 2: Personal Insolvencies by Financial Year 

Financial Year 2005/06   2006/07   2007/08   2008/09   2009/10   2010/11
                      year to date
1 Bankruptcies 5,423   5,885   6,158   14,777   13,810   11,411
2 Protected Trust Deeds 7,199   8,298   7,509   7,633   9,188   7,980
3 Total Personal Insolvencies 12622   14183   13667   22410   22998   19,391

Note: LILA route to bankruptcy introduced at start of 2008/09 financial year.

DEBTOR APPLICATIONS

The Accountant in Bankruptcy received 2,402 debtor applications for bankruptcy in the fourth quarter of 2010/11. At the end of the quarter 118 applications were still being processed. During the quarter 84 applications were rejected as the criteria for bankruptcy had not been demonstrated and 120 were returned mainly due to the introduction of a new application form on 15 November 2010.

CASE ADMINISTRATION

In Scotland, a trustee is appointed to administer each bankruptcy. A nominated insolvency practitioner may be appointed as trustee or the Accountant in Bankruptcy may be appointed. For the fourth quarter of 2010/11 the Accountant in Bankruptcy was appointed trustee in 2,167 cases awarded, representing 81 per cent of bankruptcies for the quarter.

DEBT ARRANGEMENT SCHEME

During the quarter there were 478 Debt Payment Programmes approved, an increase of 9 per cent on the previous quarter and an increase of 15 per cent on the same quarter in the previous year. 

Table 3: Debt Payment Programmes by Quarter

Financial Year 2009/10 2010/11 Percentage change 2010/11 Q4 on:
Quarter Q4 Q1 Q2 Q3 Q4 2010/11 Q3 2009/10 Q4
Debt Payment Programmes under the Debt Arrangement Scheme 417 494 497 440 478 9% 15%

COMPANY LIQUIDATIONS AND RECEIVERSHIPS

Receiverships and liquidations are of those companies which the Court of Sessions has jurisdiction to wind up, and are recorded in the Register of Insolvencies (RoI).

The Accountant in Bankruptcy received 294 notices of Scottish registered companies becoming insolvent or entering receivership in the fourth quarter of 2010/11. This figure includes 13 receiverships, 199 compulsory liquidations, 82 creditors voluntary liquidations and 56 members voluntary liquidations.

Table 4: Company Liquidations and Receiverships

Financial Year 2009/10 2010/11 Percentage change 2010/11 Q4 on:
Quarter Q4 Q1 Q2 Q3 Q4 2010/11 Q3 2009/10 Q4
Receiverships 6 22 16 5 13 160% 117%
Compulsory Liquidations 204 210 147 177 199 12% -2%
Creditors' Voluntary Liquidations 72 72 84 83 82 -1% 14%
Total Corporate Insolvencies 282 304 247 265 294 11% 4%
Members' Voluntary Liquidations 37 51 33 60 56 -7% 51%
 
Notes
  • 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.

     

  • 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 while 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.

     

  • Details of bankruptcies, PTDs, liquidations and receiverships are found on the register of insolvencies, which is maintained by the 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 on the Accountant in Bankruptcy website at www.aib.gov.uk