More than £80m paid to creditors of Scottish insolvent individuals

The latest Annual Report from the Accountant in Bankruptcy (AiB) has revealed that insolvency practitioners have repaid nearly £34 million to creditors of individuals in Scotland in the last year.

Over £4m was returned to creditors of individuals who had been declared bankrupt while nearly £30m was returned to creditors of individuals who had signed a trust deed.

Taking into account payments to creditors under the Debt Arrangement Scheme (DAS) and where the Accountant in Bankruptcy is trustee in bankruptcy nearly £85m has been returned to creditors through statutory debt relief solutions in 2016/17.

A further £17m is held by the Accountant in Bankruptcy which is due to be paid to creditors but has not been possible to do so either because creditors have failed to cash payments sent to them or can no longer be traced at addresses previously given.

The annual report indicates that a dividend was made to creditors in 86 per cent of trust deeds in which a debtor received their discharge. The average dividend paid to ordinary creditors was 19.8p in the £, slightly above the average of the last five years of 19.7p in the £.

Figures obtained from the AiB annual reports show that nearly one third of approved DAS payment plans have been revoked and over 50 per cent have been varied.

The report also focuses on the performance of the Accountant in Bankruptcy as a Scottish Executive agency.

Of the 20 performance indicators and targets across the business, 70 per cent were met. This included reducing the unit costs of administering each of the debt solutions. The cost of the AiB to administer a sequestration reduced from £451 to £365 while the cost of administering a debt payment programme under DAS reduced from £78 to £65. The cost of administering a PTD remained at £47.

Overall the net cost of AiB operations was £134,000 compared to a surplus of £668,000 the previous year.

David Menzies, ICAS director of practice (pictured), said: “The latest figures from the Accountant in Bankruptcy demonstrate the value that insolvency practitioners bring to the Scottish economy.

“The money returned to creditors is in the main due to local authorities or businesses. When a taxpayer or customer faces insolvency the initial expectation is that none of what is due will be recovered. The diligence, skills and experience of insolvency practitioners in recovering assets and ensuring that debtors who can make a contribution from income do so ensures that each year a significant amount is returned to creditors.”