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Trends and Outlook for 2012 - Bankruptcy
27 January 2012
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Having not been updated since 1988, Irish Bankruptcy Law had become stale and irrelevant to present Irish society.
The Civil Law (Miscellaneous Provisions) Bill 2010 saw the introduction of automatic discharge (for the first time) from bankruptcy after 20 years and reduced the period after which the bankrupt could make an application to Court for release from bankruptcy from 12 to 6 years.
Delivering on an election promise, the coalition introduced further amendments in The Civil Law (Miscellaneous Provisions) Bill 2011 which saw the timeline for automatic discharge reduced from 20 to 12 years and the period after which the bankrupt could made an application to Court for release from bankruptcy further reduced from 6 years to 5 years.
While these changes bring us closer to EU norms and address certain of the conditions of the EU / ECB / IMF bailout, both release mechanisms still fall considerably short of 3 year period recommended by the Law Reform Commission for automatic discharge and the 12 month period currently in operation in the UK. This plus the fact that many of the recommendations of the Law Reform Commission have not been implemented in anyway still creates an attraction for bankruptcy tourism.
Once the final amendments have been made to the legislation, substantial increases in the number of Irish bankruptcies / personal insolvencies can be expected however further substantial reductions in periods may bring a public backlash as many of the developers / businessmen perceived as being to blame for Ireland’s current economic difficulties may also choose to engage in the process and walk free from their debts.
By Micheál Leydon
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