Moving North offers the best route through bankruptcy
Published 15/04/2011 | 05:00
LAST night's moves against them are a massive shock for Sean Quinn and his family, leaving them with €2.8bn of debt but without the companies they need to pay it back. It begs the question of how Quinn can ever escape the massive debt burden.
One of the most attractive options open to him is to cross the Border and take advantage of the UK's extraordinarily lax bankruptcy laws.
There is no suggestion Quinn has made any such moves, not least because he has, until now, hoped to trade his way out of the crisis and eventually repay his debts.
Anyone owing unsustainable debt can seek bankruptcy, but the Republic has the toughest bankruptcy regime in Europe. It takes 12 years to fully discharge debts here, and even then preferred creditors -- such as the tax man -- have a veto on the bankrupt ever being allowed to walk away from old debt.
The situation north of the Border couldn't be more different. Since 2006, bankruptcy in the UK can be completed in a staggering 12 months. The process will undoubtedly hurt your credit rating -- making it much harder to borrow in future -- but that's it.
The main impediment to filing in the UK is that the person seeking the bankruptcy has to be a bona fide resident for at least six months.
In Mr Quinn's case, six months' residency just a few miles from his current home would be enough to get the ball rolling.
"Judges don't want to see bankruptcy tourists, but for people living along the Border that can be a very difficult call," a Belfast-based solicitor said last night.
"Every Monday, Wednesday and Friday, the court list in Belfast is full of guys filing for bankruptcy," he said.
Mr Quinn's businesses have always straddled the Border and with €2.88bn of seemingly unrepayable debt hanging over him, the question of bankruptcy undoubtedly starts to arise.
While Mr Quinn may have had hopes of trading his way out of trouble, last night's move against him probably ends that as a realistic prospect. Anglo's central role in the process probably also ends any incentive he might have had to cooperate further with the bank.
If Quinn does seek a UK filing he won't be the first. One-time Cork developer John Fleming filed for bankruptcy in England after moving there last year. Anglo's own former boss David Drumm has filed in the US.