Statutory debt relief and debt management products overseen by Accountant in Bankruptcy (AiB) have returned £80 million to creditors in the past year, according to the Annual Report and Accounts published by the Agency today (13 September 2017). A record 1,603 debt payment programmes under the Scottish Government’s pioneering Debt Arrangement Scheme were also completed in 2016/17, the highest number since the scheme was introduced in 2004. This marked a 25% increase on the previous year.
The Debt Arrangement Scheme (DAS) is a statutory debt management solution administered by AiB. Under DAS, a debtor commits to a debt payment programme which allows them to repay their debts based on their disposable income, while benefiting from protection from creditors who are prevented from taking action against them to recover their debt.
£37.3 million was repaid through the Debt Arrangement Scheme, of which at least 90% is returned to creditors. Creditors also received £29.4 million from debtors in protected trust deeds during the year, with an average dividend of 19.8p in the pound. The administration of protected trust deeds is conducted by insolvency practitioners and AiB is responsible for supervision of this process.
£17.0 million was returned to creditors in bankruptcy cases. Overall, the average dividend paid to ordinary or preferred creditors in bankruptcy cases was 21.1p in the pound.
There were 4,562 bankruptcies awarded in 2016-17, an increase of 21% compared with 2015-16. However, while bankruptcies have increased over 12 months ago, activity levels in 2015-16 were at an all-time low, largely because of legislative and operational changes introduced through the Bankruptcy and Debt Advice (Scotland) Act 2014 on 1 April 2015.
The number of bankruptcies awarded in 2016-17 was still 32% lower than in 2014-15 and 36% lower than in 2013-14. Corporate insolvencies dropped by 6% compared to 2015-16 to 846.
AiB Chief Executive Richard Dennis said: “This report highlights the challenges but also the successes AiB has faced and achieved over the past 12 months. “We ushered in the consolidated Bankruptcy (Scotland) Act 2016 in November, which brings together all the various elements of bankruptcy legislation into a single piece of statute for the first time in a generation. Stakeholders are already benefiting from the clarity and accessibility of this new legislation.”
“Continued improvements have been made to our IT systems, with a series of upgrades released across the year. Work has also continued across the year on the major project to modernise Scotland’s corporate insolvency rules, while policy development work has taken place on the Debt Arrangement Scheme, protected trust deeds and diligence, with further reforms on these mechanisms being brought before the Scottish Parliament in the coming months.”
“None of this would have been possible without the continued commitment, hard work and professionalism of AiB’s dedicated staff and I am grateful to them for all they have achieved over the year.”
Other key facts and figures from the Annual Report and Accounts 2015/16 include :
- The number of protected trust deeds registered increased by 16%
- The number of approved debt payment programmes under the Debt Arrangement Scheme increased to 2,233 from 2,043 a year ago
- For bankruptcies concluded where AiB was trustee, the average dividend to creditors was 22.8p in the pound
- 74% of bankruptcies awarded came from debtors applying for their own sequestration. The majority of the remainder were from creditors petitioning the court to pursue the sequestration of a debtor. Less than 1% were from trustees in a trust deed applying to the court for a debtor’s sequestration due to the failure of the trust deed·The total number of bankruptcies awarded was the second lowest volume of awards in the last 10 years