What are bankruptcy restrictions?
Bankruptcy restrictions were introduced by legislation on 1 April 2008. The grounds for an Order are described in Section 56B of the Bankruptcy (Scotland) Act 1985, as amended (The Act).
The Act specifies that only The Accountant in Bankruptcy can apply for a Bankruptcy Restrictions Order (BRO) if the Trustee considers that there has been behavior, after 1 April 2008, by the debtor that could be considered dishonest or blameworthy in some way, either before or during the bankruptcy, they may make a report to the AiB and request an investigation. The Investigation Application Form can be found at Appendix K of the Notes for Guidance.
The restrictions that can apply are those which are applied when a debtor is undischarged from their bankruptcy, such as how they can obtain credit and the ability to act as a Director or manage a business. These restrictions are recorded in the Act and legislation pertaining to a specific post or type of employment. The period over which the restrictions can apply may vary between 2 and 15 years, depending upon the severity of the misbehavior.
A BRO can be granted by AiB and can last a minimum of 2 years. However, should AiB feel that a debtor’s actions require a longer term BRO (between 5 and 15 years) AiB will refer the case to the relevant court for a sheriff to make a decision. The restrictions come into force on the date the Sheriff grants the Order and cease to have effect on the date specified in the Order.
AiB can make an interim BRO or request a sheriff to grant an interim BRO, if there is an identified need to protect the public before a full BRO can be imposed. A Sheriff can rule on an Interim BRO application without the need for a full Court hearing. Hence, a decision can be made on an Interim BRO before the BRO hearing is set. The restrictions that are imposed under an Interim BRO are the same as under a BRO. An Interim Order shall cease to have effect when either AiB or a sheriff grants a BRO.
The full list of current Bankruptcy Restriction Orders and Undertakings can be found in the statistics section of this website.
Further information regarding bankruptcy restrictions can be found in the AiB publication Bankruptcy Restrictions Guide.
Details of whether bankruptcy restrictions apply to a debtor can be ascertained by a search of the Register of Insolvencies.