The Bankruptcy (Scotland) Amendment Regulations 2024 Child Rights and Wellbeing Impact Assessment

Declaration

Is a Stage 2 Children’s Rights and Wellbeing Impact Assessment required?

CRWIA not required

Please explain why below and contact the children’s rights unit to discuss this decision crwia@gov.scot

Explanation why CRWIA is not required

7. This legislation amends regulation 26 of the 2016 Regulations which sets the prescribed rate of interest which may be payable on creditors’ claims in bankruptcy cases under section 129(10)(a) of the 2016 Act, where there are sufficient funds available to pay creditors’ claims in full.

8. Interest is paid between the date of sequestration and the date creditors’ claims are paid. It is currently the greater of the prescribed rate, which is a fixed rate of 8% per annum, and the contractual rate agreed between the person subject to the bankruptcy and individual creditors when entering into a contract before the bankruptcy.

9. These regulations will amend the prescribed rate of interest on these claims from the currently fixed rate of 8% per annum to a rate linked to the Bank of England base rate at the date of sequestration to more accurately reflect the prevailing rate of interest at the date of sequestration for each relevant case.

10. Creditors will continue to be entitled to their contractual rate of interest if this is higher than the prescribed rate.

11. The proposed changes impact on:

• those who have voluntarily sought debt relief through a bankruptcy (sequestration) or have been made bankrupt following a petition presented by a creditor, if their creditors can be paid in full,
• those creditors whose claims can be settled in full, and
• the trustees who administer the bankruptcy and who have to calculate and pay the interest.

12. The amendment to the methodology for calculating the rate of interest on creditors’ claims in bankruptcy, where there are sufficient funds to settle a creditors’ claims in full is unlikely to directly impact children and young people up to the age of 18.

Sign and date

Policy lead signature and date of sign off

Name: David Farr

Title: Policy Manager: Corporate Insolvency

Date: 1 February 2024

Deputy director signature and date of sign off

Name: Richard Dennis

Title: The Accountant in Bankruptcy and Agency Chief Executive

Date: 5 February 2024