Tuesday 26 September 2017

Insolvency reforms 'won't stop bankruptcy tourism'

Charlie Weston Personal Finance Editor

BANKRUPTCY tourism to the UK will continue even after new insolvency rules come into operation here later this year, Justice Minister Alan Shatter has admitted.

Scores of high-profile developers and business people have headed to Britain to become bankrupt since the property bubble burst in 2008.

They can be discharged with a clean sheet after just one year, compared to 12 years in the Republic.

But the Personal Insolvency legislation, which was signed into law on December 26 last, has reduced the bankruptcy period to three years.

There are also three new options coming in for debt-ravaged people to get debts written off, apart from declaring themselves bankrupt.

These include a personal insolvency arrangement, which is a deal with banks that is rubberstamped by the Circuit Court.

The new insolvency service should be up and running by the summer, Mr Shatter said, and would offer "hope and relief" for people overwhelmed by their debts.

Shopping

However, Mr Shatter told an Oireachtas Committee the change in the law would not stop people "forum shopping" to seek the best available terms.

"There may continue to be numbers of people continuing to take advantage of the lower period of bankruptcy in the UK," he said.

The minister added that courts in Britain were now examining more closely whether Irish people really qualified to be made bankrupt there rather than in Ireland.

Someone seeking to be declared bankrupt in another country has to prove that is their centre of main interest. People must also show they had been resident there for at least six months.

A number of insolvency practitioners have said it is becoming increasingly difficult for Irish people with substantial interests in the Republic to satisfy UK judges that they fulfil the criteria needed to be declared bankrupt in Britain or Northern Ireland.

Last year, the High Court in London overturned a bankruptcy declaration against developer and former IRA hunger striker Thomas McFeely.

And former billionaire Sean Quinn had declared himself bankrupt in Belfast in 2011, claiming to have assets of about £50,000 (€60,448) and the right to a small pension of about £10,000 a year.

But IBRC had the ruling in Northern Ireland overturned last week.

Irish Independent

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