Recall or Discharge of Sequestration

Recall of Sequestration

The Bankruptcy and Diligence etc (Scotland) Act 2007 (subsequently consolidated by the Bankruptcy (Scotland) Act 2016 allowed for sheriff courts to recall a sequestration which was awarded on or after 1 April, 2008. Pre 1 April 2008 sequestrations could only be recalled by the Court of Session.

The recall takes the form of an interlocutor and the Keeper will register a certified copy interlocutor (CCI) signed by the sheriff clerk or sheriff clerk depute. Recall of sequestration is distinct from refusal and results from the raising of a separate legal action in respect of an existing sequestration. A certified copy of the order recalling the sequestration must be sent to the Keeper.

The sheriff deals only with a limited number of requests to recall sequestrations and the majority of such applications will go to the Accountant in Bankruptcy (AiB). In those cases, where a recall is granted, the AiB will send a certified copy of the decision to the Keeper.

The recall has the effect of nullifying all warrants to cite, warrants to cite of new and memoranda of renewal relating to that sequestration case. They can be identified as being related on the RoI search by the date of first deliverance. That is, all the relevant entries on the RoI will reflect the same date of first deliverance.

Useful links

Sequestration

The Bankruptcy (Scotland) Act 2016 and the ROI - CAJR Guidance

Insolvency - Personal and Corporate (2012 Act manual)

Bankruptcy (Scotland) Act 2016 (external link)

Discharge

For petitions lodged or applications made after 1 April 2015, a debtor is no longer automatically discharged; similarly, there is no provision for discharge on composition. There are different discharge procedures to be followed depending upon whether the AiB is trustee or not but, in both cases, the AiB determines whether or not to discharge the debtor. There is no provision for the AiB to send a certified copy of the decision to discharge or not to the Keeper.

For petitions lodged or applications made between 1 April 2008 and 1 April 2015, the debtor is discharged one year after the date of sequestration. Discharge is automatic unless the trustee or the AiB proceed with a petition to the sheriff for deferral of discharge. Where deferral is granted, the sheriff clerk will send a certified copy of the order to the Keeper for recording in the ROI.

The effect of a debtor's discharge remains the same regardless of whether the petition was lodged or application made before, on, or after 1 April 2015: the debtor is discharged of all debts and obligations owed by him (under certain exceptions), but discharge (or lack thereof) does not alter or bring to an end the inhibitory effect of the recording of the CCI granting warrant to cite or the award of sequestration in the ROI (see paragraph below).

In practical terms, the ROI is cleared at the conclusion of the three year inhibitory period unless a memorandum of renewal, recall, or refusal to award sequestration is subsequently recorded in the register.