Reforms to Scottish bankruptcy laws A new Bill outlining changes to Scotland’s bankruptcy laws has been introduced. The Bankruptcy and Debt Advice (Scotland) Bill 2013 will improve financial advice and education to help people and businesses in financial difficulty to avoid bankruptcy.
The Minister for energy, enterprise and tourism Fergus Ewing said: “This is one of the most ambitious and far-reaching reforms ever considered by both the Scottish Government and Accountant in Bankruptcy. The Bill provides access to fair and just processes, allowing debtors to gain control of their debt and their lives and ensures that Scotland leads the way in meeting the rights and needs of debtors and creditors.”
While still to consider the exact detail of the reforms, Managing Director of Tremark Mark Hodgson initial reaction was one of concern for creditors. “We work with both insolvency practitioners who are often seeking not to place their clients into bankruptcy and clients directly who are owed money and often feel that making a business insolvent is one of the few options they have in terms of seeking some form of reparation while they may not secure any actual funds” says Mark.
“Naturally each problem needs to be considered individually but I’m sure we all know of cases where some unscrupulous businesses deliberately enter bankruptcy or liquidation and phoenix as opposed to those who, perhaps through ignorance or bad management, find themselves in financial difficulty” says Mark.
“I hope, as indicated by this Scottish announcement, that people who recognise at an early stage that they can seek advice and therefore avoid bankruptcy and reach an agreement with their creditors will do so. We should however not forget the financial suffering caused to creditors. The fact remains we regularly receive client instructions to take all suitable legal action to secure payment. There is always a fine balance between ensuring businesses recognise their obligations to pay while providing appropriate protection and justice for creditors.”