Back in the late 1990's the ubiquitous Katie Price t/a Jordan was at the height of her fame, gracing the pages of our tabloids, gentlemen's publications such as Loaded and FHM and perhaps the odd bedroom wall of a rather poor Law student. It was reported at the time she had a net worth of around £45million.

In December 2018 with her finances now somewhat diminished, Katie entered into an Individual Voluntary Arrangement ("IVA") with her creditors. In November this year she was made bankrupt for failing to comply with the same.

Would Katie have fared better in Scotland? To answer this we need to take a brief look at the options open to an individual seeking alternatives to insolvency in Scotland as compared to England.

In England an IVA is a contractual agreement between a debtor and their creditors. An IVA requires 75% of creditors (by value) to agree to a repayment plan. If a debtor is unable to agree or adhere to an IVA they are generally made bankrupt.

The Scottish equivalent of an IVA is known as a Trust Deed. A Trust Deed is a deed in which a debtor conveys specific assets to a trustee to be administered for the benefit of their creditors. There are two types of Trust Deed, protected and unprotected. A protected Trust Deed will bind all creditors; an unprotected Trust Deed does not.

A Trust Deed therefore performs a similar function to an IVA and thus would have offered little advantage to Katie. The advantage for Katie in moving to Scotland would have been the option of applying under the Debt Arrangement Scheme ("DAS"), a government backed debt repayment programme that allows a debtor to avoid insolvency whilst being protected from creditors. A DAS can be applied for at any stage, including after bankruptcy proceedings have been raised in court, and if granted puts a stop to any insolvency proceedings and freezes charges and interest. A DAS constitutes a plan to repay debts over an extended period of up to ten years. This often frustrates Creditors; however they can object to a DAS, and if successful, progress with insolvency proceedings.

It is understood Katie entered into an IVA to protect her £2million mansion which is now likely to be sold for the benefit of her creditors. Had Katie moved to Scotland she would have had the option of applying for a DAS which most likely would have enabled her to avoid sequestration; buying her time to release some more bestselling books about her trials and tribulations or appear in a camera infested house, jungle or dance floor to gather some hard currency to repay her creditors. Unfortunately for Katie she was south of the border and thus was bankrupted without the option of applying for a DAS. As she and Mr Andre were fond of saying, had she moved north a Whole New World of alternatives to insolvency would have been open to her.