Act and Warrant | A document issued by the court formally vesting a debtor's estate in a permanent trustee. |
Accountant in Bankruptcy | A statutory officer appointed by the Secretary of State for Scotland, with four main functions in the administration of bankruptcy: to act as trustee if none is nominated by the petitioner; to perform the role of commissioners if none are elected; to supervise the work of trustees and commissioners and regulate the sequestration process; and to maintain a public Register of Insolvencies. The office of the Accountant in Bankruptcy is an independent department of the Scottish Courts Administration. |
Apparent Insolvency | A formal state of insolvency, in which a debtor may be petitioned for sequestration. |
Arrestment | A form of diligence whereby funds due to a debtor by a third party (e.g. a bank, a customer) are held for a creditor. The funds can only be released if the debtor grants a mandate, or the creditor obtains a decree of forthcoming from the court. |
Assets | Property, including heritable, or immovable, property (land and buildings); moveable property (good, cash, money in banks, investments, etc); money owed to the debtor by others; rights to money or goods in the future; and income from employment, pensions, benefits, etc. |
Award (of sequestration) | The court order declaring a person to be bankrupt and sequestrating his/her estate. |
Charge for payment | A formal notice served by a sheriff officer, following a decree, which requires the debtor to make payment within a 14-day period. |
Commissioner | A creditor elected by the statutory meeting of creditors to supervise the permanent trustee on their behalf. |
Court of Session | The highest civil court in Scotland. |
Creditor | Any person, business or organisation to whom a debtor owes money. |
Debtor | Any person who owes money to another. Can also be used specifically to mean an insolvent person who is subject to sequestration. |
Decree for payment | A formal order of the court requiring a debtor to make payment to a creditor. |
Diligence | Various legal processes by which a creditor who has obtained a decree and served a charge for payment, or been granted a summary warrant, can pursue a debtor for payment of overdue debts. Diligences include inhibition, arrestment, earnings arrestment, and poinding and warrant sale. |
Discharge | Formal termination of bankruptcy, for a debtor usually 3 years after sequestration; for interim and permanent trustees, when their functions have been completed. |
Dividend | The payment made to creditors in a sequestration, in repayment of their debt; the proportion of the total owed which is paid out is expressed in terms of pence in the . |
Earnings arrestment | A form of diligence whereby the debtor's employer deducts a proportion of the debtor's wages (determined by statutory tables) for payment direct to the creditor. |
Estate | All property and rights belonging to a person. |
Gratuitous alienation | The transfer of property to another person, prior to insolvency, for less than full value. |
Inhibition | A legal process whereby a creditor registers an interest in heritable property owned by a debtor, thereby barring the debtor from disposing of the property without discharging the creditor's claim. |
Insolvency practitioner | A chartered accountant (or more unusually, a solicitor) qualified and licensed to act as a trustee in sequestrations or trust deeds, and to act as liquidator, administrator or receiver of a limited company. |
Interim trustee | An insolvency practitioner appointed by the court to safeguard a debtor's estate pending the election or appointment of a permanent trustee; if an interim trustee is not nominated on the petition the Accountant in Bankruptcy will be appointed. |
Permanent trustee | The insolvency practitioner elected by the creditors or appointed by the court, to take possession of the debtor's estate and to realise assets for the benefit of the creditors; if a permanent trustee is not elected by the creditors the Accountant in Bankruptcy will be appointed. |
Petition | A formal application to the court. |
Poinding | (Pronounced pinding) a form of diligence carried out by sheriff officers whereby the debtor's possessions are valued, and may subsequently be removed and sold by auction, at warrant sale. A wide range of household goods is excluded from poinding. |
Protected trust deed | A trust deed automatically becomes protected if notice of it is served on all creditors, unless the majority of the creditors, or 1/3 rd of creditors (by value of the debt), object in writing. The protected trust deed is binding on all creditors, who may not pursue other debt-recovery procedures. |
Register of Insolvencies | A public register recording details of all sequestrations awarded in Scotland. The register also includes details of protected trust deeds. |
Sederunt Book | The official and permanent record of the sequestration process maintained by the permanent trustee. |
Sequestration | The Scottish legal term for bankruptcy, whereby the insolvent person's estate is removed from his/her control, and transferred to a trustee. |
Statutory demand | A formal demand for payment of a debt, issued under oath and requiring payment within 21 days. Failure to pay, or to deny the debt, renders the debtor apparently insolvent. |
Statutory meeting | The first meeting of creditors called by the interim trustee for the purposes of electing a permanent trustee and commissioners. |
Summary warrant | Granted by the court on application by a government department or local authority for unpaid rates or taxes, a summary warrant can be followed by doing diligence. |
Trust deed | A formal, legally binding contract between a trustee and a debtor, entered into voluntarily, under which the trustee administers the debtor's assets for the benefit of his creditors. |
Trustee | See interim trustee and permanent trustee. |
Unfair preference | A payment made by a debtor to a particular creditor, which prejudices the interests of other creditors. |
Vested in | A legal term, meaning to become the property of, as the debtor's assets become the property of the trustee in sequestration. |
Warrant to cite | A warrant granted by the court ordering the debtor to appear on the date stated to show that the grounds for the sequestration no longer exist, otherwise the sequestration will be awarded. |