Editorial: Change in insolvency legislation long overdue
IT is ironic that NAMA is to offer financial incentives to prevent developers seeking bankruptcy in the UK when that option of last resort is the only meaningful option for many debtors.
Developers suffering "debtor fatigue" are seeking bankruptcy across the water – where bankrupts can be discharged in a year – rather than working through cumbersome recovery plans. Most ordinary debtors, many nursing mortgage arrears and other consumer debts, cannot afford to relocate to Belfast or London for a year to secure a fresh start. They were promised a new dawn with the introduction, two years ago, of a new insolvency regime. But the Personal Insolvency Act 2012, still heavily weighted in favour of banks – who enjoy an all-powerful veto over proposed debt deals – has not lived up to its promise.
This paper, for more than a year, has regularly called for changes to the act in order to prevent the Insolvency Service of Ireland being strangled at birth. The Government has now woke up to the reality that the 2012 Act is not fit for purpose.