Trust Deed

Scottish term for a type of IVA or Administration Order, in which the debtor’s assets are controlled by a trustee for the benefit of the creditors. The debtor grants a deed in favour of the trustee to enable this, hence the name of trust deed. It is also possible to ‘protect’ the trust deed, which prevents creditors petitioning for sequestration of pursuing the debtor in any other way.

A trust deed normally lasts for 3 years, and the trustee deals with all correspondence from creditors. This arrangement is often preferred to sequestration (Scottish bankruptcy) by both creditor and debtors, as trust deeds are less costly to administer and are more flexible, although they are still regulated by the Bankruptccy (Scotland) Act 1985.

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