Taking the UK bankruptcy route is an eagerly sought exit
WITH reform of the insolvency legislation taking much longer than expected and burdened with huge unrepayable debts, many Irish builders and property developers are opting for the UK's high-speed bankruptcy process instead.
Under the current legislation anyone unlucky enough to declare bankruptcy in Ireland faces extremely severe restrictions for the next 12 years unless they can find some way of discharging their debts before then.
Compare this with the situation in the UK, where bankrupts can start up again in business after just 12 months.
For middle-aged bankrupts a 12-year restriction period is effectively a life sentence.
Not surprisingly many of them are choosing to avail of the more liberal regime across the water instead.
Among the Irish property developers who have filed for bankruptcy in the UK are John Fleming, brothers Ray and Danny Grehan and Paddy Shovlin.
UK bankruptcy isn't a panacea for all known financial ailments. In several cases such bankruptcies have been challenged, sometimes successfully.
Developer Tom McFeely of Priory Hall infamy filed for bankruptcy in London last January.
Unfortunately for him, his bankruptcy was rescinded last month after the judge ruled that Mr McFeely had failed to disclose the fact that one of his Irish creditors had begun proceedings to have him declared bankrupt in Ireland when he applied for bankruptcy in the UK.
Meanwhile, Bank of Ireland is opposing efforts by solicitor Brian O'Donnell, who at one point had debts of €886m, to file for bankruptcy in the UK and is seeking to have him declared bankrupt in Ireland instead.
However, it was the case of Sean Quinn which conclusively demonstrated that filing for bankruptcy in the UK doesn't always work.
Last November with IBRC (the former Anglo) pursuing him for debts of €2.8bn, Mr Quinn filed for bankruptcy in Belfast in what was the largest personal bankruptcy filing in either British or Irish business history.
IBRC was having none of it and successfully applied to the judge to have his UK bankruptcy annulled.
On January 16 of this year Mr Quinn was declared bankrupt by the High Court in Dublin, meaning that he is subject to the 12-year restriction period.
This means that, unless the restriction period is reduced, he will effectively be excluded from running a business until 2024 when he will be 77 years old.