Debt Advice Handbook Scotland - 1st editionChapter 14: Business debts3. Stages of debt advice Business debt solutions in Scotland
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Business debt solutions in Scotland
Depending on the type of business that the client has/had, there may be different solutions open to them.
If the client is a sole trader, you could look at the usual debt solutions, the DAS or insolvency and treat the debt as totally personal.
    •If the client is a member of a partnership, you may need to look at personal debt solutions and deal with the partnership separately.
    •If the client is a limited company, you may need to consider solutions for the client as an individual if there are personal guarantees in place, and other solutions for the company such as winding the company up, administration or liquidation.
    •Different solutions may need to be looked at where the business continues to trade and advisers should seek advice on this.
    •Advice could be sought from an insolvency practitioner or accountant.
Business Debt Arrangement Scheme
In Scotland, it is possible for certain types of business’ to use the DAS.
Business DAS is a statutory debt management tool introduced by the Scottish government to help partnerships, trusts or unincorporated body of persons which are in debt to repay their creditors.
A Debt Payment Programme (DPP) under Business DAS allows the business to pay off debts over an extended period of time, while giving them protection from creditors taking action against them to recover their debts.
There are five parties involved in Business DAS.
    •The client: this has to be a partnership, trust or unincorporated body of persons which has debts and has agreed to a debt payment programme with an insolvency practitioner.
    •DAS-approved insolvency practitioner: provides debt management advice to the client and applies for a DPP on behalf of a client.
    •Creditor: someone who is owed money and has agreed or is obliged to accept payments under the programme.
    •DAS administrator: responsible for the approval of a DPP, the approval of money advisers and payments distributors and maintaining the DAS Register and eDEN.
    •Payments distributor: distributes the money gathered to creditors.
Similar to individuals and couples, Business DAS must be applied for through the help of a DAS-approved adviser. However, due to the nature of Business DAS, this adviser must be a qualified insolvency practitioner.
However, there are exclusions to Business DAS. These include:
    •limited or public companies;
    •businesses not formed under Scots law;
    •those established or carrying on business outside of Scotland.
The business DAS is similar to a normal DAS application, but with a few differences:
    •all debts must be included and all assets must be declared;
    •insolvency practitioners in a business DAS must review the DPP viability every 12 months and must apply for revocation where it is no longer viable;
    •all business DAS cases must be completed within five years and no payment breaks are allowed;
    •no offer of composition may be made in business DAS.
Advisers should have a referral agreement with insolvency practitioners to make an appropriate referral.