Property & Mortgages

Wednesday 20 August 2014

Boost for Insolvency Service after it secures vital PIP deal

Charlie Weston, Personal Finance Editor

Published 01/04/2014 | 02:30

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David Hall: Irish Mortgage Holders Organisation director
David Hall: Irish Mortgage Holders Organisation director

THE struggling Insolvency Service is set to get a massive boost from a new link-up which is likely to see thousands of debt write-down deals being processed through the system.

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David Hall's Irish Mortgage Holders Organisation (IMHO) has agreed a tie-up with Grant Thornton that has the potential to transform the fortunes of the Insolvency Service.

Mr Hall's organisation has 2,700 cases ready to be put through the Insolvency Service for free for those who cannot afford to pay.

The Insolvency Service has got off to a very slow start. It has been dogged by controversy due to its cost and because banks have a veto over deals.

Now Grant Thornton (GT) will operate as the personal insolvency practitioner (PIP) on the debt write-down deals brought to it by Mr Hall's group.

There will be no charges for heavily indebted consumers using the service if they cannot afford to pay for a PIP, with the costs being picked up by the banks.

Two Grant Thornton debt advisers will operate out of the Dublin offices of the IMHO. As part of the deal, Grant Thornton will provide funding to the Irish Mortgage Holders group.

A year after it was launched, it is understood the Insolvency Service has only 10 cases getting court approval, made up of debt settlement arrangements (DSA) and personal insolvency arrangements (PIAs).

And Mr Hall has been a persistent critic of the Insolvency Service of Ireland (ISI).

Asked about his decision to now use Grant Thornton to do formal ISI deals, Mr Hall said: "I still think the ISI is unfit for purpose, but it would be irresponsible for us to hold back a debtor who needs a formal, legal and binding deal which the ISI can offer."

Banks prefer informal deals with stricken householders, as they retain more control, he said. This was one of the reasons the ISI options were proving unpopular, he added.

But Mr Hall said his organisation would now be able to offer a one-stop shop of both informal deals and formal debt arrangements.

The link-up with Grant Thornton would be a "game changer" for the ISI, he said.

Steve Tennant, partner with Grant Thornton, also said the tie-up would "change the marketplace".

Head of the Insolvency Service, Lorcan O'Connor, said: "We would welcome this. It offers a more holistic solution."

He said that a personal insolvency deal covers all the debts of a household.

Recently publicised write-offs, particularly those involving AIB, only dealt with mortgage debts. A DSA or a PIA deals with all debts and there is no option for a bank to wriggle out of it once it is agreed, Mr O'Connor explained.

And if a loan book is sold by a bank there can be no changes to an ISI-arranged deal.

Irish Independent

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