The Coronavirus (Scotland) (No.2) Bill

The Bill was published on Monday 11th May 2020 and is expected to come into force by the end of the May. The Bill is subject to Parliament’s approval however it is currently being fast tracked.

Minister for Business, Fair Work and Skills, Jamie Hepburn, said:

“We are aware of the ongoing financial difficulties faced by individuals during this unpredictable time; and also recognise the restrictions placed on those administering the insolvency process and the challenges this can pose”

“I hope these additional temporary measures will help – and we will continue to look at what more might be required as we start to think about the coming months.”

The Bill includes proposals to make a number of important changes to current bankruptcy legislation. The changes are temporary for a period of five months initially but with the ability to be extended should that become necessary.

Why the Bill was created?

The Bill was introduced to help respond to the emergency situation caused by the coronavirus. The Bill is in addition to the changes already made by the Coronavirus (Scotland) Act 2020 which was passed by Parliament on 1 April 2020. Changes affecting Scotland were also made by the Coronavirus Act 2020, passed by the UK Parliament on 25 March 2020.

Public health guidance means changes to:

the lives of everyone living in Scotland
the way business in Scotland operates
the way public services are delivered and regulated

Due to the fact that many workforce’s are working in a limited capacity with many staff being re-deployed to prioritise essential services. The Bill makes changes to some of the duties of public bodies, allowing essential public services to continue to be delivered. It also makes changes that will support businesses and individuals in Scotland.

The measures being amended are:

Minimal Asset Procedure (MAP) Bankruptcy Applications

The Bill makes a number of changes regarding MAP administration:

the debt ceiling is increased from £17,000 to £25,000:
student debt is exempted from the debt ceiling calculation; and
MAP application fees are removed for those whose sole income is derived from benefits, and reduced to £50 from the current £90 for all others.

Full Administration Bankruptcy

Bankruptcy applications which do not satisfy MAP criteria are subject to full administration. Currently, the application fee in full administration bankruptcies is £200, this will be reduced to £150.

Qualified Creditors

Creditors may petition for the sequestration of individuals / entities when owed at least £3000. This minimum debt threshold will be increased to £10,000.

Bankruptcy Administration

Building on the provisions of the Coronavirus (Scotland) Act, the new bill makes a number of changes to expedite bankruptcy administration process:

the deadline for trustees to send their DCO proposals to AiB in creditor petition bankruptcies is increased from 6 to 12 weeks;
virtual statutory meetings of creditors are permitted;
all statutory forms detailed in the Bankruptcy (Scotland) Regulations can be completed with electronic signatures; and
bankruptcy circulars may be sent electronically with the assent of the recipient.

Registers of Scotland

The Bill also includes a provision to introduce electronic transmission of inhibitions and inhibition renewals to Registers of Scotland.

Sources