09 Mar 2012

Intimating Claims to the AiB

Intimating Claims to the AiB

Recent payouts by the Accountant in Bankruptcy (‘AiB’) have highlighted the importance of intimating a claim to them if you are a creditor owed money by someone who has been declared insolvent in Scotland. Jane Gordon, Solicitor, explains the process.

Recent payouts by the Accountant in Bankruptcy (‘AiB’) have highlighted the importance of intimating a claim to them if you are a creditor owed money by someone who has been declared insolvent in Scotland. Jane Gordon, Solicitor, explains the process.

Between April and December 2011, Scotland’s insolvency service has ingathered and thereafter given out some £4.4m of funds to creditors of people who had been declared insolvent in Scotland.

When a person in Scotland is declared bankrupt, the appointed Trustee will invite claims and proof of debts from all known creditors. The creditor must return a ‘creditor’s claim form’ (Form 4) and provide adequate details of the claim. If this is not provided, the Trustee will not be able to facilitate the transfer of funds to the creditor and any unallocated money will be lodged with the AiB in a “consignation account”.

A consignation might occur when: the Trustee is unable to identify the correct owner of the debt due to financial institutes merging or selling debt; when surplus funds are due to debtors, but the Trustee has no contact details; or when there are small amounts of money due to the creditor that it would cost more to pay out than the actual sum of money due.

The AiB is responsible for holding these unclaimed funds or “consignations”, following a bankruptcy or trust deed case, until a person or company comes forward to claim the money owed to them. The AiB will hold these funds for seven years to allow creditors to make their claim. If a creditor wishes to claim anything from the consignation account, they must write directly to the AiB. If, after seven years, no claims have been made, the funds will be surrendered to the Scottish Consolidated Fund.

The AiB and agency chief executive, Rosemary Winter-Scott, states that: “It is important that Scotland’s insolvency process balances the needs of debtors and creditors. When dividends are produced as a result of insolvency, it is key that they are actually returned to the creditors to whom they belong, for the benefit of the wider economy. The agency has worked hard to ensure that it is better able to connect creditors with funds they might not otherwise have received and as a consequence, reduce the amount of creditors’ funds the agency holds.”

In December 2011, £1.15m was returned to the Royal Bank of Scotland by the AiB. This was the total of 773 dividend payments as a result of money consigned to the AiB through either a personal bankruptcy or a trust deed case where the trustees were unable to facilitate the transfer of funds.

It is becoming increasingly commonplace for lenders attempting to recover unsecured debts to come up against a borrower who has been declared insolvent. The advice we give our lender clients is, after lodging a Form 4 with the Trustee, to monitor the progress of their claim. It may well be worth their while contacting the AiB directly to establish whether they hold funds consigned in the lender’s name.

Regardless of the success ratio, something is better than nothing and lenders can often be surprised how much can be recovered after a claim has been intimated to the AiB.

Jane Gordon, Solicitor


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