William Fry, one of Ireland’s leading law firms, has called for the urgent reform of Ireland’s punitive bankruptcy laws. Over 120 business people who attended this morning’s William Fry breakfast briefing on the recent developments in Corporate Recovery and Insolvency, heard how Ireland’s bankruptcy laws are extremely restrictive on all parties which is resulting in a form of bankruptcy tourism.
Ireland’s bankruptcy laws are outdated and are slow and costly for both the creditors and debtors. At the moment, an individual who enters bankruptcy in Ireland will be penalised for at least 12 years. The bankruptcy penalties in the UK apply for only 12 months and this is resulting in a number of individuals relocating to the UK to take advantage of the more favourable legislation.
Speaking at the breakfast briefing, Michael Quinn, Head of Corporate Recovery and Insolvency at William Fry, said: “Our bankruptcy laws are very restrictive, cumbersome and punitive on both the debtors and creditors of a bankrupt company or individual. While the Bankruptcy Act is only 21 years old it is still antiquated and excessively punishes individuals who are forced into bankruptcy. The stark contrast between the Irish and UK laws are resulting in a number of people relocating to Britain or Northern Ireland to avail of the less restrictive bankruptcy legislation. The Law Reform Commission is currently reviewing Ireland’s legislation in this area and an urgent reform of these laws would be welcomed.”
William Fry also outlined how Ireland’s insolvency laws have been really tested in the last number of months. As a result of this, the Courts have increased the scrutiny in order for a company to be successful in petitioning for an Examiner. Companies now need to demonstrate a very strong probability of survival, sometimes for up to two years after the petition.