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Saturday 16 December 2017

Thousands of professionals seek help to go bankrupt

Vets and accountants lead calls for rule change to practise after insolvency

Many professionals are being forced to declare bankruptcy after making property investments during the boom
Many professionals are being forced to declare bankruptcy after making property investments during the boom
Charlie Weston

Charlie Weston

A raft of bodies that represent professionals are seeking changes to rules to allow bankrupt members continue to practise.

The dramatic moves reflect a debt default crisis that has engulfed formerly high-rolling professional classes.

These people went on a borrowing binge, piling money into property investments during the boom.

Thousands of members of the professional classes are now expected to declare themselves bankrupt, with others set to enter a Personal Insolvency Arrangement (PIA).

Professionals borrowed to buy into property syndicates, some led by the likes of former tax inspector Derek Quinlan, to buy office blocks and apartment complexes.

They are now on the hook for massive debts they can’t pay, with experts predicting a tsunami of bankruptcy and insolvency arrangements.

Bodies representing accountants, pharmacists and vets are now seeking rule changes to allow insolvent members to continue to work.

One in five clients of the Irish Mortgage Holders Organisation is now from the

professional classes, according to director David Hall.

It is setting up a special division for those with multiple debts.

These people typically have three buy-to-let investments, in addition to a ‘trophy’ home.

One client, a civil servant, has 100 properties, he said.

Huge debts are now threatening a massive default among the middle classes, investment and debt recovery experts said.

The Irish Pharmacy Union (IPU), which represents 2,100 chemists, said it was seeking changes to the 2007 Pharmacy Act, which bans a pharmacist from operating if they are an undischarged bankrupt.

A spokesman for the IPU said: "A significant number would potentially be in financial difficulty, especially those who bought their pharmacy premises."

Investigated

The Department of Health said the matter was being considered "for inclusion as part of any future amendments to the Pharmacy Act".

The Institute of Certified Public Accountants (CPA), which has 5,000 members, said its council was considering rule changes on bankruptcy. "CPA is considering changes, but council has not agreed on the content of those changes yet."

At the moment, if a member is declared bankrupt they are automatically excluded from membership.

"If a member enters into a Personal Insolvency Arrangement, this will be investigated by the CPA to determine what action should be taken regarding membership and licences held, such as practising or auditing or investment business licences," the spokeswoman said.

Head of Veterinary Ireland, Finbarr Murphy, whose organisation represents 1,300 vets, said it had sought changes to the 2012 legislation governing the profession, but was unsuccessful.

"It remains our position that this provision should be repealed," he said.

A spokesman for the Bar Council, which regulates barristers, would not comment on reports it had obtained legal advice on whether insolvent barristers could continue to practise.

Ken Murphy ,of the Law Society, which regulates solicitors, said any lawyer entering an insolvency arrangement must inform the society and may have restrictions imposed on them.

Members were reminded recently that if they go bankrupt they will have their practising certificate suspended.

A spokesman for the Medical Council, which regulates both GPs and consultants, said the profession was unusual in that there are no restrictions on insolvent or bankrupt doctors from practising.

Boom

During the boom years, many professionals were persuaded to take on investments and pay interest only for a period, but these deals are coming to an end now. Mr Hall said a number of his clients were barristers, accountants and even bankers. Asked if judges feature on the client list, he said: "We have every level of professional in the State on our books."

Banks were now forcing professionals to move out of trophy homes if they can't pay their debts, Mr Hall added.

Irish Independent

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