Trust Deed Update - stubborn and audacious
What is happening in the world of Scottish Trust Deeds? Well it is too early to say, of course, but we do perhaps detect some change in the market following the regulations that kicked in at the end of November.
Avid readers will remember that in August we noted that 69% of our small sample (300 gazette notices) went to just 5 firms. And 61% of the cases seemed to be being dealt with south of the border.
Our sample is even smaller. We have looked at the first 38 trust deeds "advertised" on the Accountant in Bankruptcy's website. We have to put "advertised" in quotes, as our view is that sticking "public" notices on a site you have to register to look at doesn't count as advertising. Advertising, in our dictionary, is "a notice or announcement in a public medium promoting a product, service or event", so the Register of Insolvencies - even if you know where to find it - is not a public register. Public - "existing in open view". But we digress.
What of our 38 trust deeds? Well only five Insolvency Practitioners have put their heads above the parapet and taken appointments. Many of the rest will find it difficult to advise a debtor to sign a four year trust deed when sequestration will be for a shorter period.
Two insolvency practitioners have 16 appointments each. That means 83% of the cases are being dealt with by just the two firms! Another has 4 appointments. Two have one each.
The geography has shifted too, with the two with most cases being based in Scotland. So now 87% of cases seem to be handled here - and all by ICAS members.
So it is very early days, and it will be interesting to see how this develops. Have most IPs given up on the trust deed, at least for now? Have the English IPs given up on the Scottish market? Will the trustees just accept the fees diktat from the major creditors representatives, or seek to challenge it where they can? And will these five brave souls have to justify to ICAS, and ICAEW and IPA how signing these people up for a four year trust deed can constitute best advice?
And the barest hint of a thought hasn't begun to cross our mind, at least not yet, that the statutory bar on pre-trust deed costs being met from the estate will mean debtors being kept in limbo - paying arrangement fees to debt management companies for months before the insolvency practitioner darkens their door. That would be a whole other pipeline than the one that has just started to flow, and one which won't begin to spill out new cases for a few months yet. Surely not?
To revenge reasonable incredulity by refusing evidence, is a degree of insolence with which the world is not yet acquainted; and stubborn audacity is the last refuge of guilt. (Samuel Johnson)
These questions - and many others - will be answered in the next episode of www.insolvency.biz. Or not.