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R3, the Association of Business Recovery Professionals and The Institute of Chartered Accountants of Scotland (ICAS) have urged the Scottish Executive Bill team to examine concerns over underlying problems associated with the Bankruptcy & Diligence (Scotland) Bill.
Concerns were aired over the statistics contained in the consultation document and on which the Scottish Executive has based its arguments for change.
The Accountant in Bankruptcy (the Scottish equivalent of the Official Receiver) has agreed that significant statistics produced in the document were inaccurate even though the Bill team did not accept there was an error.
Eileen Maclean, R3 Scotland Chair commented: “We emphasised that the Scottish Executive’s argument will be discredited if remedial action is not taken quickly.
"Furthermore, members proposed that changes to PTDs will eliminate their successful use in rescuing small businesses run by sole traders or partnerships, and that this was contrary to the spirit of the Bill.
“In addition R3 and ICAS members agree that PTDs should pay a dividend, and a better dividend than sequestration. However, the insolvency community do not agree that the Government should dictate a minimum dividend for all cases.”
It is now proposed that each case should be examined on its own merits and a potential comparative outcome in each case produced for creditors.
This would resolve the public protection issue by giving creditors the right to request sequestration where necessary and ensure greater creditor participation.
The Scottish Executive’s minimum dividend simply consigns a large section of the debtor community to debt oblivion.
Bruce Cartwright, Chairman of ICAS’s Insolvency Committee, explained; “The success of the Bill and the desired aim of an integrated debt relief system in Scotland is dependent on apparent insolvency, constitution of which is a legal requirement before a sequestration petition can be presented.
"Also, the current definition needs to be widened to accommodate those debtors currently unable to access sequestration and those debtors for whom sequestration would be more appropriated but currently PTDs
are their only solution. “
The Bill contains no proposals on apparent insolvency and there is no indication
as to when these proposals will be announced for consideration.
Source:
RedAlert
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