Sequestration – Bankruptcy (Scotland)

To qualify as a creditor to petition for an individual’s sequestration, apparent insolvency must be established within the preceding four months. This can be done on the expiry of a statutory demand which has not been objected to timeously or on expiry of a Charge for Payment of Money. A Charge can be served on any document which contains a lawful warrant for execution which may include a decree (Judgement) or a document registered in the Books of Council and Session, such as lease, minute of agreement, guarantee, Certificate of Money Provisions or the like.

A petition for the sequestration of a debtor may be presented by:

  • a qualified creditor or creditors. A qualified creditor is one to the debtor owes at least £3,000 (2 or more creditors who are together owed at least £3,000 can petition jointly);
  • a trustee under a trust deed granted by the debtor; or
  • the debtor.

There are requirements specific to each type of petition and others that are common to all petitions for sequestration.

Common requirements

The common requirements are:

1. The court must have jurisdiction.

The Sheriff Court has jurisdiction if, at any time in the year immediately preceding the date on which the petition is presented, the debtor either:

  • had an established place of business in the Sheriffdom; or
  • was habitually resident within the Sheriffdom; or
  • was a partner in a firm which the Sheriff has jurisdiction over and which has been sequestrated or is currently subject to sequestration proceedings.

The Court of Session also has general jurisdiction. A creditor's petition may be presented either to the Court of Session or the Sheriff Court. A debtor's petition will normally be presented to the Sheriff Court.

2. The debtor must owe at least £3,000.

Restrictions

Restrictions are placed on creditors from extending or petitioning for sequestration whilst a debtor is in the Debt Arrangement Scheme, subject to a Trust Deed or an approved moratorium.

The petitioning creditor is obliged, and must confirm to the court that a search has been carried out on the DAS Register and that the debtor is not subject to a DAS, Trust Deed or Moratorium.

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