William Fry today highlighted the proposed changes needed to modernise Ireland’s stringent bankruptcy laws. Over 150 people who attended a William Fry Breakfast Briefing this morning titled, ‘Bankruptcy – A Moveable Phenomenon’, heard how Ireland’s current bankruptcy legislation is resulting in a form of ‘Bankruptcy Tourism’.
Barry Cahir, Corporate Recovery & Insolvency Partner, said: “Ireland’s current bankruptcy laws are extremely restrictive, cumbersome and punitive on both debtors and creditors. This begs the question – Is bankruptcy a punishment and should it be a rehabilitation exercise? The proposed changes to the current legislation would result in better regulation of the process and far more efficient use of time and money. Current bankruptcy laws are resulting in ‘Bankruptcy Tourism’ where individuals are travelling to the UK or US to file for bankruptcy due to their more debtor friendly legislation.”
“In 2009 there were 17 cases of bankruptcy in Ireland. The figure for 2010 reached 30. For the same period in Great Britain and Northern Ireland, these figures totaled 75,000 and 1,250 respectively. The EU / IMF facility includes a requirement that the proposed changes facilitate a non-judicial Debt Enforcement Office, eliminating the lengthy and expensive process of Court hearings. Under the current law, a creditor can pursue bankruptcy for sums owed in excess of Eur1,900. The new legislation would increase that figure to Eur50,000. The qualified automatic discharge would also be reduced from 12 years to 3 years allowing for quicker rehabilitation.” Mr Cahir added.
This morning’s briefing also included expert commentary from Dr Ronnie O’Toole, Chief Economist, National Irish Bank, and a perspective on bankruptcy legislation in Northern Ireland from Toby McMurray, Head of Insolvency at William Fry’s sister firm, Tughans Solicitors.
Speaking at the briefing, Dr Ronnie O’Toole said: “We should continue to see economic growth this year, but personal insolvencies are likely to increase for some time after the economy has recovered. In order for an entrepreneurial society to flourish, the acceptance of failure and the ability to take risks must be put into practice. Current bankruptcy and insolvency legislation in Ireland does not allow for that and acts as a very serious deterrent.”
This morning’s William Fry Breakfast Briefing was part of the firm’s Spring / Summer 2011 series. Further briefings will examine ‘Current Trends & Visits from the Regulator’ and ‘Building for the Future – Key Employment Law Considerations’.
