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Wednesday 27 August 2014

Record number of Irish avail of UK bankruptcy

Dearbhail McDonald Legal Editor

Published 19/03/2013 | 05:00

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A RECORD number of Irish people relocated to England last year to declare themselves bankrupt.

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Some 129 former Irish residents movedacross the Irish Sea last year, a 131pc increase on 2011 when 69 people sought to avail of the UK's shorter bankruptcy regime, according to new figures from insolvency publication 'Stubbs Gazette'.

But those numbers are expected to fall as the government's new personal-insolvency service gets up and running this summer.

The new insolvency service will replace the current inflexible bankruptcy system with court-approved deals between over-stretched borrowers and banks.

Some debts will be written off if a payment agreement is observed over a five to seven-year period.

The changes to Irish bankruptcy procedures and the reduction of the discharge period from 12 years to three may also stem the small tide of people seeking bankruptcy in the UK.

James Treacy, managing director of 'Stubbs Gazette', said a number of high profile UK bankruptcy applications by Irish developers have been turned down on the grounds that the person's centre of main interest (COMI) is in Ireland.

Children

"It is certainly not practical for the vast majority of people considering the bankruptcy option, especially if they have children who would have to be relocated in the UK with all the attendant headaches that entails," said Mr Treacy.

"Applications for bankruptcy in the UK are being subjected to increasing scrutiny by the UK authorities who are demanding more and more evidence that the applicant's COMI is in the UK.

"Evidence of genuine relocation including residence, bank accounts, phone records and medical/dental arrangements are all subject to enquiry."

The Government is expecting 3,000 people to apply for bankruptcy in the first full year of operation of the new insolvency service and an estimated 18,000 to apply for debt write-offs as part of the debt agreements to be approved by banks.

But a Red C poll conducted for 'Stubbs Gazette', to predict the likely uptake of the various arrangements on offer under the new personal insolvency bill, shows that thousands are expected to seek debt deals.

The poll suggests that almost 7,000 people will apply for bankruptcy when the newly reduced three-year period comes into effect.

There are currently 153 Irish bankrupts serving under the old 12-year regime who have yet to be discharged.

Irish Independent

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