Creditors gain higher return in personal insolvencies
Figures for 2014/15 reveal funds returned to creditors increased while there was a 'sharp drop' in the number of personal insolvencies, according to Scotland's insolvency service.
The amount of funds returned to creditors in personal insolvency has continued to rise according to figures from Scottish Government agency Accountant in Bankruptcy (AiB).
The annual report revealed that almost £65m was returned to creditors through Protected Trust Deeds and the Debt Arrangement Scheme.
More than £27m was paid out to creditors under Protected Trust Deeds and the average dividend to creditors in trust deeds increased for the 6th consecutive year. At 21.7p in the pound, the average dividend is now at its highest level since the credit crunch.
The percentage of sequestrations where a dividend was paid to creditors increased by 2% and sequestration cases where a dividend was being paid were at their highest level since 2009-2010.
AiB also revealed that £20m is sitting waiting to be paid to creditors who cannot be traced.
It also said said that more than £36m was returned to creditors through the new Debt Arrangement Scheme and 896 cases where concluded – a 73 per cent increase on the previous year.
The AiB annual report provides detail on the insolvency landscape in Scotland, with personal insolvencies, including bankruptcies and personal trust deeds falling by 19 per cent to 11,617, from 13,793 in 2013/14.
The agency said 2014/15 was the sixth consecutive year that the number of bankruptcies has fallen, totalling 6,730, with 8,147 bankruptcies discharged.
AiB was tasked with implementing the Bankruptcy and Debt Advice (Scotland) Act in 2014/15 and this included: new routes into bankruptcy for parties with minimal assets; new protections for creditors and the ability of AiB to impose Bankruptcy Restriction Orders of periods between two and five years for debtors in cases of misconduct.
David Menzies, ICAS Director of Insolvency, said: "ICAS welcomes the progress made by the Accountant in Bankruptcy and the Scottish Government in implementing the bankruptcy changes brought about under the Bankruptcy and Debt Advice (Scotland) Act 2014.
"Insolvency practitioners have played an important part in the delivery of those changes and ensuring the right of debtors' relief from debt is balanced with maximising the return for their creditors. Insolvency practitioners have played an important role in returning increased level of funds to creditors, many of whom are small businesses who themselves would otherwise face financial difficulties.
"We look forward to continuing to work alongside the Accountant in Bankruptcy and the Scottish Government to deliver an effective financial health service for the people of Scotland."
New AiB chief executive, Dr Richard Dennis, said: "We have been able to recover our total operating costs from service users, thereby eliminating the requirement for public funding for the second year, which in an era of tightening public sector spending is an achievement we're very proud of.
"Despite a decrease in applications across all formal debt relief and debt management products, it is positive to see the amount repaid to creditors continues to increase year-on-year."