Insolvency technical update: June 2025

Read our latest insolvency technical update – your round-up of the recent developments in insolvency.

The Bankruptcy and Diligence (Scotland) Act 2024 (Commencement No.2, Transitional and Saving Provisions) Regulations 2025 

These regulations brought into force sections 4, 5, 11 and 12 of the Bankruptcy and Diligence (Scotland) Act 2024 (“the 2024 Act”), subject to transitional and savings provisions, on the 25 June 2025.

They primarily make modifications to the Bankruptcy (Scotland) Act 2016 by:

• Making minor amendments to clarify the process for applying for recall of sequestration. These will only apply where an application for recall hasn’t been made before 25 June 2025.
• Where a debtor is seeking a recall of sequestration, it won’t be a condition for recall for interest to be paid on their debts if the whole of those debts are paid in full within 6 months of the award of sequestration. For existing cases interest accrued on the debt between the date of sequestration and the date of payment of the debt isn’t payable if payment of the debt is made in full within 6 months after 25 June 2025.
• Allowing a trustee in sequestration to resign if the debtor cannot be traced / in non-cooperating and clarifies that the trustee is entitled to take outlays and remuneration from the ingathered estate up to the date of their resignation.
• Introducing a new process for a trustee to resign from office, when a debtor has failed to cooperate, by applying for the Accountant in Bankruptcy to take over as trustee.

To give practical effect to the changes from the above The Bankruptcy and Diligence (Scotland) Act 2024 (Consequential Amendments and Forms) Regulations 2025 also came into effect on 25 June 2025. This makes a consequential amendment to the notification requirements on the Accountant in Bankruptcy in the Bankruptcy (Applications and Decisions) (Scotland) Regulations 2016 in connection with the process for recall where AiB is the trustee and acts on its own accord in proposing recall of an award of sequestration. It also provides for the forms to be used in connection with the resignation of a trustee where the debtor cannot be traced. These are:

• Form 35 to be used for a trustee application to AiB for authority to resign office on account of the debtor’s failure to co-operate.
• Form 36 for the ‘intention to resign’ notice which a trustee is required to use to notify the debtor and every creditor known to the trustee of their intention to make an application to AiB to resign office.
• Form 37 which AiB is to issue to the trustee where AiB decides to grant the trustee’s application for authority to resign office.

The AiB have also issued a Dear Trustee letter highlighting the trustee discharge process for cases transferred to the AiB under the new provisions.

Clarity on interpretation of creditor in insolvency legislation

Since two legal court decisions were made in early 2024 there’s been widespread confusion over whether creditors who have been paid in full during an insolvency process remain a creditor for various purposes under insolvency legislation. But clarity has now been obtained following cross-profession action and recent response from the Insolvency Service (IS). Read more in this article.

RPO new case template and guidance update

The Redundancy Payments Office have issued an updated template for IPs to request a new case to be set up and obtain a CN reference number. They have also updated the accompanying guidance with more detail added to sections on New case set up request, Providing employee information to the Insolvency Service, and Complex cases or large number of expected redundancies. 

RPO pension claim guidance

Updated guidance on how to submit information about employee pensions to the RPO has been published. Additional guidance has also added to the second tab of RP15A spreadsheet.

Dear IP

Dear IP 168 has been issued by the Insolvency Service. This includes updates on: 

• The Information Sharing (Disclosure by the Registrar) Regulations 2024. 
• Claims to Redundancy Payments Service – employment status checks by insolvency practitioners.
• FCA updated guidance - FG25/2: Guidance for insolvency practitioners on how to approach regulated firms.
• The use of the term ‘creditor’ in insolvency legislation.

AML Update - UK high risk third countries list

The list of high-risk countries for AML is updated in line with FATF changes announced at their June 2025 plenary session. Bolivia and the British Virgin Islands have been added, while Croatia, Mali and Tanzania have been removed from the list.

ICAS insolvency monitoring annual report for 2024

Read our insolvency monitoring annual report for 2024. The report provides an overview of our insolvency monitoring activities during the year and key messages and findings arising from monitoring reviews.

Consultation on revising Statement of Insolvency Practice 14

The Joint Insolvency Committee (JIC) has commenced a consultation exercise on proposed changes to Statement of Insolvency Practice (SIP) 14 - A Receiver’s Responsibility to Preferential Creditors.

Legal update

Gary Quillan v The Commissioners for HMRC [2025] UKFTT 421 (TC) In a recent ruling, the Tax Chamber First Tier Tribunal (FTT) has provided much needed clarity on what constitutes a release or write-off of an overdrawn director’s loan for the purposes of section 415 of the Income Tax (Trading and Other Income) Act 2005. 

Noal SCSp & Ors v Novalpina Capital LLP & Ors A recent High Court judgment has confirmed that the “12-month rule” in Members’ Voluntary Liquidations (MVLs) is a strict requirement, not a flexible guideline.

Richard Bathgate, Trustee of the Sequestrated Estates of David Black and Jennifer Black against David Black and Jennifer Black. The Sheriff Court considered and agreed to an application by the trustee to sell the debtors family home. The debtors had claimed the sale would have caused extreme hardship, they had attempted to commence recall of sequestration and that there was a conflict of interest by the legal firm representing the trustee.