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Annex A - Apparent Insolvency
Rules on Apparent Insolvency are set out in section 7 of the Bankruptcy (Scotland) Act 1985. These rules will be amended by the Bankruptcy and Diligence etc. (Scotland) Act 2007. Subject to Parliamentary approval, it is anticipated that these amendments will come into force in December 2007.
This provides that a debtor can establish Apparent Insolvency if -
- They are bankrupt in England or Wales
- They run a business and have written to their creditors to say that they have stopped paying their business debts (but this is subject to some restrictions)
- A European liquidator has brought insolvency proceedings against them under European law
- They grant a trust deed
- A creditor has been to court, got a decree, and has had a charge for payment served on the debtor and the 14 days allowed for them to pay have passed without them making a payment
- A creditor has served a statutory demand on the debtor telling them to pay the debt within 21 days and they have not paid the debt or sent the creditor a letter by recorded delivery denying that the debt is due for payment.
The 2007 Act will remove some of the existing grounds which establish Apparent Insolvency. A summary warrant served on behalf of a local or public authority will no longer be used to establish Apparent Insolvency.
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