Hundreds of bust business figures flock to UK for soft bankruptcies
HUNDREDS of bust Irish businesspeople are flocking to the UK to get billions in debt written off and avail of softer bankruptcy laws, an Irish Independent investigation reveals.
At least four times as many Irish people have sought bankruptcy in the UK than in Ireland over the past two years, new figures reveal.
One bankruptcy lawyer in the UK has estimated he has written off more than €1bn in Irish debt in the last year and a half, adding: "In the next six months that'll be up to €1.5bn."
As many as 200 Irish "bankruptcy tourists" have travelled to Britain and the North to take advantage of more lenient bankruptcy laws there since the start of 2011. In the same period just over 50 were adjudicated bankrupt in the Irish courts – with the vast majority being involuntary.
The figures were provided by four major law firms which specialise in assisting Irish people declare bankruptcy in Britain.
The main attraction of voluntarily declaring bankruptcy in the UK is that a person can be discharged after just 12 months, compared to a punitive 12 years in Ireland.
At the start of the month, Bernard McNamara became the latest Irish builder to file for bankruptcy in London.
Other high profile individuals who have successfully declared themselves bankrupt in the UK include developer Ray Grehan, ex-Fine Gael Minister and former betting shop boss Ivan Yates, and Westlife singer Shane Filan.
Another developer, John Fleming, has already been through the process and is discharged from his UK bankruptcy, free to go back into business if he chooses. Former Quinn Group boss Sean Quinn and Priory Hall developer Tom McFeely both tried to declare themselves bankrupt in the UK, but were ultimately forced into bankruptcy in Ireland.
Irish people can file for bankruptcy in the UK if they can show that they have a home address in Britain or the North, and prove that their centre of main interest is located there.
The UK courts service don't record statistics on the nationality of bankrupts there – but records show that 787 people have filed bankruptcy in Northern Ireland in the first six months of this year alone.
In contrast, just 112 people have been made bankrupt in courts in Ireland since 2008.
Leicester-based Steve Thatcher of Debt Options, which runs the website IrishBankruptcyUK.ie, said that as many as 75 Irish people will have used his firm to go bankrupt in Britain by Christmas.
"When we first started here it was the professional property developers. I'd have done at least three in excess of €100m," he said.
"Now the sort of stuff we've got coming through is not overly heavy borrowing but enough, you know – a million, two million, some as low as €150,000."
Mr Thatcher described the UK bankruptcy process as "quick, relatively cheap and efficient".
He pointed out that after a year the bankrupt is free to be a company director again and they no longer have any creditors.
One Belfast-based insolvency specialist, solicitor John Gordon of Napier and Sons, said that he had 13 southern clients who have declared themselves bankrupt in the North.
He also represented Sean Quinn in his ill-fated effort to declare himself bankrupt there.
Asked how much Irish debt he'd helped write off, he said: "I would say we're talking big enough numbers now. I've got two that I did, both of whom were over €100m."
He added: "Mainly they're bigger bankruptcies – certainly €5m, €10m, €15m plus would be the norm.
"There's very little incentive for people to move here unless they're really going to get a benefit."
Meanwhile, Mark Skinner of the Manchester-based Farley's Solicitors estimated his number of Irish clients as "over 50 but less than 100" in two years. Again, many of the clients had debts running into tens of millions of euro.
McHale Muldoon is a Dublin-based firm that also offers the service. Solicitor Mark Muldoon said he had helped with 20 Irish clients go bankrupt in the UK in the last six months.
He called the bankruptcy regime in Ireland "draconian".
The Government's Personal Insolvency Bill, due to come into force in 2013, will reduce this to three years.
However, Mr Muldoon said the bill could be "problematic" because many people will not want to be what he described as "guinea pigs". He said they'd "rather go the tried and tested route", adding that there was "nothing illegal or dirty" about filing for bankruptcy in the UK.