Commentary on Sections Discharge following sequestration Section 19 – Deferral of discharge where debtor cannot be traced
38.This section inserts 4 new sections after section 54C of the 1985 Act (inserted by section 7 as noted above), in order to create a requirement on trustees to act as set out in those sections, in circumstances where the debtor’s whereabouts cannot be ascertained and the trustee is, therefore, unable to carry out their usual functions.
39.The new section 54D provides that, if the trustee is unable to ascertain the debtor’s whereabouts, the trustee must submit to AiB, no sooner than 8 months and no later than 10 months after the date of award of sequestration, a notice to the effect that, despite investigation into the debtor’s whereabouts, the trustee has been unable to locate the debtor. If AiB is satisfied that it would not be reasonably practicable for the trustee to continue to search for the debtor, then AiB will issue a certificate deferring the debtor’s discharge indefinitely.
40.If AiB issues such a certificate then section 54E allows the trustee to apply to AiB to resign from office, no later than 6 months after the indefinite discharge has been agreed. However, should the debtor be traced before this application is made, the trustee should continue to administer the case as nominated. Where a trustee wishes to resign under the above circumstances, and the trustee has satisfied AiB that the trustee has attempted to trace the debtor and that it is not practical or cost effective to continue the search, AiB must agree to the resignation of the trustee and AiB becomes trustee. The costs incurred in the administration of the case, prior to the case being transferred to AiB, are to lie with the original trustee. Thereafter, should the debtor be traced, the trustee will be able to submit a claim in the sequestration.
41.Section 54F provides for where the debtor subsequently makes contact with the trustee. In such cases, if the trustee is satisfied that the debtor has cooperated in the administration of the estate, made a full and fair surrender of the debtor’s estate, a full disclosure of financial and business affairs and the provision of any relevant account or other related documentation, the trustee must send a report in accordance with section 54(5) to AiB, no later than 10 months after the debtor makes contact or is traced by the trustee. This means that the report must include information about the debtor’s assets, liabilities, financial affairs and business affairs as well as their conduct in relation to the sequestration. AiB will consider the report and any representations made before deciding on whether to grant discharge or not.
42.Section 54G provides for the debtor or any creditor to be able to apply for a review of decisions by AiB to discharge or to refuse to discharge a debtor under section 54F, and for onward appeal to the sheriff. Separately to the process where the debtor cannot be traced, if a sequestration was awarded wholly inappropriately, the debtor may retain the usual rights to recall the sequestration (now exercisable at any time – section 26(1)(b) of the Act).