Renewal of Sequestration

Memorandum of Renewal

By section 26(6) of the Bankruptcy (Scotland) Act 2016, the trustee in sequestration may, if he has not been discharged before the end of the three year inhibitory period, send a memorandum for renewal to the Keeper for recording in the ROI. Such recording renews the inhibitory effect for a further three years. It is possible for the trustee to continue to renew the sequestration at, or before, the expiry of each subsequent three year period. Although infrequent, it is therefore possible that a sequestration can run indefinitely as a result of memoranda of renewals being recorded. This provision applies no matter what date the sequestration commenced. It should be noted that sequestration, and therefore the three year period, commences on the date of first deliverance, (the warrant to cite date) or the date of award in the certified notice of determination (CND) not on the date of registration of the warrant to cite or CND.

The inhibitory effect of sequestration lasts for three years from the warrant to cite / award date even though the debtor is automatically discharged from bankruptcy after one year. It does not matter whether the debtor has voluntarily sought sequestration via the Accountant in Bankruptcy (AiB) or whether it is a creditor-led sequestration through the court. Therefore it is important to realise that recording a memorandum of renewal does not prevent the debtor's automatic discharge where this is possible, i.e. for pre 1 April 2015 sequestrations.

The 2016 Act also clarifies that the inhibitory effect of the recording of renewal begins with either (i) the date of expiry of the inhibitory period triggered by the recording of the certified copy interlocutor granting warrant to cite, or (ii) the expiry of an additional three year inhibitory period that resulted from the recording of a previous memorandum of renewal.

Re-appointment

Section 152 of the 2016 Act provides for a trustee to be appointed or re-appointed if certain assets of a debtor are discovered after the trustee's discharge, but before the expiry of a five year period beginning with the date of sequestration. Such trustees may send a memorandum for recording in the ROI before their appointment expires and this has the same inhibitory effect as the memorandum of renewal described above, although the date that this inhibitory period begins is the date of notification in terms of section 153(1) of the 2016 Act.