No proposed changes to insolvency legislation

Friday 10 January 2014 21.10
The Insolvency Service of Ireland is to hold a conference next month for practitioners and banks
The Insolvency Service of Ireland is to hold a conference next month for practitioners and banks

The Director of the Insolvency Service has said there are no proposed changes in legislation in relation to the setting up of a new protocol to streamline the operation of debt deals.

Speaking on RTÉ's News At One, Lorcan O'Connor said the system was not being overhauled.

He said the proposed change was a natural evolution to move towards a protocol between personal insolvency practitioners and creditors on the basis of systems that have worked well in other jurisdictions.

He said the aim of the protocol is to standardise the terms and conditions that would apply for any arrangement.

The initiative follows the experience in Britain, which showed that when a protocol was in place it resulted in 90% of restructuring offers being accepted by creditors.

Next month the Insolvency Service of Ireland is to hold a conference for insolvency practitioners and banks in an effort to establish the new protocol.

Mr O'Connor said he did not believe the service was in trouble in relation to poor up-take of the various types of debt relief being offered to the public.

He said in looking at the level of cases that have so far arisen since the service was established last autumn, it must be remembered that it is akin to examinership and there is a period of 70 days when a practitioner has to put a case together.

There are hundreds of cases in the system but he accepted there has only been a handful that have reached completion.

Mr O'Connor said in the experience of solutions in other jurisdictions they show real take-up becomes evident only a number of months after legislation is introduced.

He said that based on anecdotal evidence, there has been an increase in the number of enquiries from people seeking the help of the service.

Mr O'Connor said this time last year if somebody had a problem with debt they had no ready-made solution available to them  - now they do and it will return them to solvency and give them a chance.

He said a number of practitioners have said they would not charge upfront fees but practitioners are doing a job and have to be paid, which is likely to be come out of the scheme of arrangement so in effect it is funded by the banks.

Mr O'Connor said in relation to people who do not have any money available to pay fees or to offer to creditors, it may be that not all of the solutions introduced through legislation are appropriate for them because many are voluntary in nature.

If they do not have money, bankruptcy may be the appropriate solution, he said.