QUESTIONS AND ANSWERS FOR THE NOTES FOR GUIDANCE

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1 UESTIONS ND NSWERS FOR THE NOTES FOR GUIDNCE GENCY CSES dministration Does the gent need IB confirmation to hold the Statutory Meeting or to dispense with holding one? No. But, a meeting should only be held if: it is in the public interest; or if creditors wish it; or if you wish to put your name forward for election. Should the gent apply for a COS? You should only apply for a COS if IB specifically asks you to do so. Will the IB nominate the gent as Permanent Trustee if there is no election at a Statutory Meeting? Yes, but only if the ccountant is not nominated on the petition. Can the debtor be reimbursed for his expenses if the initial interview is conducted in the gent s office? You can only use your discretion to conduct the initial interview in your office in COS cases or where the case meets the COS criteria or exceptionally if the debtor does not live in Scotland or lives on an outlying island. You can reimburse the debtor s reasonable travel costs for attending the interview. What documentation should be submitted with a Suspected Offences Report? You should complete the form at ppendix J to the Notes and provide all supporting proof of the offence. Should an gency case be administered differently from a Trustee case? No. You should treat the case as if you were administering it in your own right, subject of course to the terms of the Contract and the related guidance. gents are expected to use the same discretion as trustees.

2 2 ssets Can the debtor keep his motor vehicle? Yes if its value is 1,000 or under. If the car is worth more he can keep it if: it allows him to make a contribution; and the amount obtained in contributions over three years is more than the amount realised from a sale. Is IB authority needed to accept an offer for heritable property? Yes. But agreement to value and market the property are not required when the secured creditor has not or is not intending to call up the security. When should the inhibition on a property be renewed? The appropriate memorandum should be sent to the Keeper of the Register before the third anniversary of the sequestration (by the gent), and at three yearly intervals, until you are able to realise the Trustee s interest or make up title in her name. Is it the ccountant s policy that all moveable assets should be realised by the gent? No only those where it is cost-effective to realise. However you should detail in the sederunt book when a decision not to realise is taken. The test for pursuing any assets is the cost-effectiveness of a particular course of action. Should the gent/trustee personally ingather all book debts? You should consider whether it is more cost-effective to undertake this yourself or whether a professional debt collection agency should be instructed to ingather the debts on a no win no fee basis. t what stage in the sequestration should I seek to dispose of trustee s interest in the family home? s soon as possible after the sequestration commences. Please refer to the Notes for Guidance. ccounts/fees etc Does the gent need IB authority to incur outlays? Only if the outlay is to be over 175. You do not need agreement to instruct, for example, valuations, searches, or minor legal costs.

3 3 Can gent claim a fee on his/her bank interest? No. If I am required to submit a claim under Schedule 2, Duty 10 (Other Work), what is the procedure? Your request will be considered upon receipt of a completed nnex K3. This should be submitted prior to undertaking the work. If you fail to submit the form or omit sufficient detail, agreement can be delayed or refused. greement over the phone may exceptionally be given, but you must follow it up with a K3 as soon as possible. The more information you provide, the quicker and likelier you will obtain agreement. What documentation should be sent with an account? Duplicate accounts, vouchers and bank statements for the period and nnex K1. Can outlays be claimed and reimbursed mid way through an accounting period? Yes, if they are over 50. Submit an nnex I. Should Correspondence files be sent with accounts? No. Should travel expenses (not fees) be included on the nnex G? Yes. Should all outlays listed in the nnex K1 also be listed on the nnex G? Yes. Should the gent reclaim the VT on his fee? No. The ccountant will reclaim this. However, you are responsible for reclaiming VT on the outlays you directly incur. When I am completing the scheme of division, what are the IB fees and outlays? The fees, outlays and statutory fees are contained in the Determinations. You will have to add on any further fees and outlays incurred after the date of the last Determination. The fees are set down in the Fees Order, found in our Notes for Guidance, Statutory Instruments section. Can accounting periods be extended (Schedules part 1 & 2)? Yes - See Dear Trustee/gent letter of 20 May 2003 on this website.

4 4 Closing Procedures Does the gent have to submit an nnex O if assets cannot be realised until a later date? Yes, if you intend to end your administration between the third and fourth anniversaries of the start of the case. Note: in complex cases, usually involving ongoing legal action or negotiations it is acceptable and expected that an gent will continue his/her administration without IB authority. It is not appropriate to send an nnex O where an gent has taken no action with an asset which should have been realised (for example, even including over-secured properties where a nominal sum should be sought). Should gents send in their files with their Sederunt Book when their administration is complete? Yes, all your working papers should be sent. Remember also the final circular and the new ppendix D1. Recall What should I do if the debtor petitions for recall of his sequestration? There are specific instructions in Part 12.8 of the Notes for Guidance which must be followed. How is the gent paid in a Recall case? See part and of the Contract. Please also see procedure following receipt of petition for recall in the Notes to the gency Contract. If debtor is trading and advises he intends seeking a recall what should I do? You should assess whether the business can proceed profitably pending a recall. You should include trustee s hours for supervising trading in any computation. In most trading cases it is likely that the decision will be to close down the business. IB consent is required to continue trading. Full details of trading and proposals regarding recall must be provided when you recommend to IB that trading should continue. The debtor must fully disclose his assets and liabilities. If you obtain evidence that assets and liabilities have not been disclosed, or it is apparent that the business is not trading profitably, it should be closed down. The debtor should be given a deadline to: instruct solicitors; petition for recall; and provide sufficient funds to meet fees and outlays and creditors claims or provide evidence that he has settled creditors claims.

5 5 This deadline should be short. If there is any delay, you should take the decision to close the business down. You must make all this clear to the debtor in writing at the outset. Please refer to the Notes for Guidance for Trustees and gents. Management of Estate The debtor has not returned his current status report. What do I do? You are expected to use your discretion and decide whether there is any benefit in pursuing this. Is the ccountant s approval required to allow the debtor to continue to trade? Yes, but no approval is required to close the business. Do gents need agreement to fix a level of contribution? No. You are expected to use your discretion. Do I need approval to make application under Section 32(2) for a contribution order? No. You are expected to use your discretion. But the assumption is that it will be costeffective to do so. If you need to instruct a solicitor to attend a hearing, consider how cost-effective it is. If you think it is appropriate to proceed, you only need IB consent if you incur an outlay over 175. Is IB authority needed to obtain (a) a search and (b) a valuation? (a) No. (b) No, but you must first get an idea of the level of equity by contacting the secured creditor and establishing whether re-possession has started or is likely. Debtor won t co-operate. What do I do? Send a letter requesting completion of the Form 4 and/or a meeting at the debtor s home at a fixed date and time. If there is no reply, send a letter by recorded delivery. Consider whether it is appropriate to obtain and enforce a search warrant (see Section 18(3)(c) of the ct). Once the Permanent Trustee is in office obtain a court order under Section 64(2). If the debtor won t co-operate with a court order then he will have committed an offence and a Suspected Offences Report can be submitted. Remember the offence under Section 64(2) is not failure to co-operate. It is failure to comply with a Sheriff s Order.

6 6 What do I do if I cannot trace the debtor? If you are satisfied the debtor is not simply ignoring correspondence sent to a known address you may instruct a tracing agent (you will need IB agreement to do this if the outlay exceeds 175). If you are still unable to trace the debtor you need take no further action unless you receive new information. When you submit your first account, give details of the steps you have taken. What do I do if debtor now lives (a) outwith Scotland or (b) on an outlying island? Initially you may send the list of assets and liabilities and/or questionnaire by post for completion and follow-up on the telephone if there are any gaps. In (b), if you are or become aware that debtor is trading or has assets that need safeguarding then an on site visit will be needed. The usual rules concerning gency fees and outlays apply. [continued]

7 7 TRUSTEE CSES dministration When should the Minutes of the Statutory Meeting be submitted to the IB? Within 14 days of the meeting. ssets Is IB authority needed to sell heritable property in Commissioner cases? No. Regarding disposal of assets, when and on what aspects should I consult IB? You should consult with IB once you have, to your own satisfaction, reached an agreement, which agreement can be subject to IB approval. If IB approval is required, you only need consult IB in matters detailed in the Dear Trustee/gent letter of 20 May ccounts/fees What accounts are required in Commissioner cases? We require to audit the Interim account, and require copies of all other accounts, signed by the Commissioner. Can claims for a fee in an interim account be adjusted at a later date? No. Only accounts of the permanent trustee can. See Section 53(5) of the ct. Should a dividend supervision fee be paid in Commissioner cases? No. When should VT be shown through the account? Only in cases where the debtor was not VT registered, (that is where VT is not recoverable).

8 8 What happens if there are insufficient funds in hand to take a claim for remuneration (in an accounting period of a Permanent Trustee)? Submit ppendix B1 to the ccountant along with the account and claim for remuneration. The remuneration will be deferred until such time as there are sufficient funds available to enable the fee to be fixed. Requests to fix any previously deferred fee must be made in writing, after which an amended determination will be issued. Is it necessary to submit an account with the proposed Scheme of Division? Yes, always (see Section 53 of the ct). Closing Procedures Must the ccountant s statutory fees be paid if there is no money in the case? Yes. The Permanent Trustee will not be discharged until the fees are paid. When applying for discharge what should I do? First, you must make sure all IB fees have been settled and unclaimed dividends/unapplied balances remitted. ll assets should, of course, be realised. Then, you send in the Sederunt Book which should include the final circular to creditors and the ppendix D1. Trust Deeds When should the ccountant be advised that a Trust Deed has gained Protected Status? Immediately after the expiry of the period for objection. What should I send when registering a Protected Trust Deed? You should send: a copy of the trust deed; a signed certificate that it is a true copy of the trust deed and that there have not been enough objections to prevent the trust deed being protected; and a statement of affairs.

9 9 Do I need my account audited by IB? No - unless a creditor or a debtor specifically requests this before a final distribution is made. You may request an audit as well but this is not necessary. Where an audit is undertaken a fee is payable. Does IB need consulted regarding the administration and management of the estate? No - IB has no locus in this regard and should not be consulted. What happens if a Trust Deed is superseded by sequestration? trustee in a Trust Deed must denude in favour of a trustee in sequestration. The trustee may take fees, in accordance with the trust deed from any assets converted into cash prior to the date of sequestration. (However, a trustee in a trust deed petitioning for the sequestration of a debtor should not use these monies to pay for the expenses of the petition.) The balance, together with any unrealised assets must be passed to trustee in sequestration. ny unsatisfied fees rank as an ordinary claim in the sequestration. What should I send in when registering my discharge in a Protected Trust Deed? You should send: your Form 11, indicating how the estate was realised and distributed; a certificate to the effect that the distribution was in accordance with the Trust Deed; and a notice confirming that you have received your discharge from the creditors.