One thing to be clear about before you read further. The Accountant in Bankruptcy publishes no guidance on Business DAS, so the practical detail on this page comes from Business Debtline, which is the only guidance-level source there is.

The legal detail comes from the regulations. How the Debt Arrangement Scheme works covers the individual scheme.

Five types of body, and the test is what the debtor is rather than what it does. Regulation 22A applies to an application by a debtor which is a legal person, a trust or an unincorporated body of persons.

In and out

Business Debtline’s fact sheet names those five types, including a limited partnership within the meaning of the Limited Partnerships Act 1907.

The provision itself

Regulation 22A was inserted whole by the 2014 amending regulations, in force 11 December 2014. There is no separate Business DAS Part in the regulations, which is why references to one are hard to find.

The business wording is scattered through the ordinary regulations instead. That is why a business programme and an individual programme share so much of their machinery.

Because a sole trader is not a legal person separate from themselves. The debts are the individual’s, so the individual scheme is the route.

What the sources say

Business DAS is for a legal person, trust or unincorporated body. A sole trader uses the ordinary scheme.

Business Debtline confirms it from the other direction in its individual Debt Arrangement Scheme guide, where it says composition is available to sole traders but not in a business debt payment programme.

What that means in practice

A sole trader gets the individual rules throughout. That is the nine tenths consent threshold, free advice, no five-year cap and access to composition.

It also means trade credit incurred in the ordinary course of business is permitted credit during the programme. Do you qualify for the Debt Arrangement Scheme sets out the individual conditions.

It is a report by the money adviser saying the business can realistically get to the end of the programme. Regulation 22A(7)(c) requires it in every Business DAS application.

The three limbs

That five-year limit is the one real ceiling in the scheme. It appears again as a standard condition at regulation 27(2)(l)(iii), and it does not apply to an individual programme, as how much a Debt Arrangement Scheme costs and the individual guides set out.

Who can give it

Business Debtline says the approved money adviser must be an insolvency practitioner. That is the sharpest practical difference from the individual scheme, where a money adviser may be a citizens advice bureau, a local authority or an accredited adviser.

It is also where the money changes hands. Business Debtline says practitioners usually charge a fee for submitting the application, and those fees cannot be included in the programme.

Viability is a continuing test

The adviser reviews the business every twelve months. If they can no longer make the declaration, that is itself a ground on which the programme can be revoked.

Yes, in Business DAS. Regulation 24(1ZA) requires each creditor of a legal person, trust or unincorporated body to consent, and the nine tenths route belongs to individuals only.

What unanimity means here

Business DAS kept the old rule. Regulation 24(1ZA) still requires every creditor of a legal person, trust or unincorporated body to consent.

It is not the same as every creditor actively agreeing. Business Debtline says creditors have 21 days to respond and any who do not reply within the time limit are treated as having agreed, which is how the unanimity requirement is satisfied in practice.

Consent inside the business as well

Regulation 22A also requires consent from the people behind the body. Every partner in a partnership, and the majority of trustees for a trust.

Business Debtline adds all general partners for a limited partnership and an authorised representative for a corporate or unincorporated body. A withdrawn consent is a revocation ground.

Do all an individual’s creditors have to agree?

Not all of them. Since 4 November 2019 a programme for an individual is approved where not less than nine tenths in value of the creditors consent, under regulations 23(1)(a) and 24(1) of the Debt Arrangement Scheme (Scotland) Regulations 2011.

Programmes applied for before 4 November 2019 are not affected. Those keep the unanimous consent rule and the old eight per cent distributor fee.

That change was made by the 2019 amending regulations, and whether all your creditors have to agree sets out the individual test and the fair and reasonable route behind it.

On seven points, and the differences are not cosmetic. Consent, length, who advises, who pays, the distributor fee and access to composition all change.

Side by side

The contrast is deliberate on the face of regulation 17, as substituted by the 2019 amending regulations. For an individual a distributor must charge and the fee is twenty per cent, while for a business it may charge and the fee must be no more than eight per cent.

So eight per cent is a ceiling and not a rate. The Accountant in Bankruptcy’s own fee guidance gives only the individual figures and makes no distinction for a business.

Composition is not available

No offer of composition may be made where the debtor is a legal person, trust or unincorporated body. Composition is for individuals.

Regulation 46A(1A) was inserted on 11 December 2014, and paying a programme off early sets out what composition is and why it is rare even for individuals.

The conditions that only apply to a business

• Declaring all assets owned by the body to the money adviser by the date of the twelve-monthly review.
• Not selling a non-trading asset during the programme without notifying the adviser and getting agreement in advance of any sale agreement.
• Making all payments due under the programme within five years after the date of the application.

There is one point in the business’s favour. Regulation 27(3) gives fourteen days rather than seven to notify a material change of circumstances.

Interest, fees and charges are frozen from the date you apply, and creditors taking part cannot enforce the debts in the programme while you keep to it.

What Business Debtline says it does

Its Business DAS guide puts it three ways: interest, fees and charges frozen from the date of application; protection from creditors applying to make the business bankrupt or using court action to enforce; and the frozen charges written off on completion.

How the freeze works covers the instrument behind it, which applies to both versions of the scheme.

The moratorium, and the figure to be careful with

Six months. The period was six weeks until section 23(2) of the Coronavirus (Recovery and Reform) (Scotland) Act 2022 substituted six months in section 198 of the Bankruptcy (Scotland) Act 2016, with effect from 1 October 2022.

That period is in section 198 of the Bankruptcy (Scotland) Act 2016. Summaries that still give six weeks are quoting the position before 1 October 2022, so check the statute rather than the summary.

One in any twelve months, under section 195(2). It ends early if a Debt Payment Programme is approved, and it can run past six months where an application has been lodged and not yet decided.

What goes in, and what does not

A programme covers the debts it provides for, and the same exclusions apply as in the individual scheme. Which debts can and cannot go into a programme sets out the dividing line.

The ordinary revocation grounds apply, and there are three more that exist only for a business debtor. All three are about the body itself rather than the payments.

The business-only grounds

• The format of the debtor changes during the period of the programme.
• The money adviser is unable to make a declaration of viability because the debtor no longer meets the requirements.
• The consent of an individual who consented under regulation 22A is withdrawn.

Those sit at regulation 42(1)(e), inserted on 11 December 2014 by the same instrument that created regulation 22A.

The ordinary grounds still apply

Arrears, a breach of a condition and an untrue statement in an application all remain available. Why a Debt Arrangement Scheme can be revoked sets out the whole list and the four-week proposal window.

A business payment break also exists, at regulation 37(1)(i), deferring payments for up to six months. It is a variation like any other.

Before you apply

Speak to a free adviser about whether the business is viable at all, because that is the question the declaration turns on. Business Debtline is free and covers business debt generally, and our Debt Arrangement Scheme page explains how we help.