Summary

The Personal Insolvency Bill 2012 has passed Committee Stage in the Dáil. The Select Committee on Justice, Defence and Equality made a number of changes to the Bill, many of these being technical changes to clarify provisions or to correct inconsistencies.

Key changes

Some of the key changes made by the Select Committee were as follows:

Government proposals for new legislation would alter the law and procedures of personal insolvency in radical ways. The proposals include the establishment of an independent Insolvency Service and the introduction of non-judicial procedures for addressing unsecured debts (of any value) and secured debts (in the range €20,000 to €3 million). Current bankruptcy laws would also be amended.

On 25 January 2012 the Government announced proposals to amend the laws and procedures of personal insolvency in radical ways.

On 25 January 2012, the Irish Government published the heads of a proposed new law, the Personal Insolvency Bill, which, it states, has the aim of providing “a new approach to dealing with insolvency” in Ireland.

The Minister for Justice and Equality has published details of a proposed Personal Insolvency Bill.   It is expected that the Bill itself will be published on 30 April 2012 when further details will then be available. The Minister has invited comment from any interested parties on the General Scheme of the Bill. The proposed Bill would provide for the establishment of an Insolvency Service to incorporate the new non-judicial insolvency arrangements. The new non-judicial debt settlement system would operate subject to certain conditions.  These would include:

In Re: Michael McLoughlin Pharmacy Ltd. The examiner sought the High Court’s approval for a scheme of arrangement which limited his liability for negligence. The secured creditor objected as a matter of principle because such limitations of liability had become commonplace in schemes. The secured creditor made it clear that there was no suggestion of any negligence by the examiner in the particular case.

The court considered:

In an insolvent winding up, preferential creditors are entitled to be paid first from assets subject to a charge which at the time of creation was floating, regardless of whether the floating charge has crystallised at the commencement of the winding up.

InDellway and Ors. v National Asset Management Agency & Ors., a number of companies and Paddy McKillen appealed a decision of the High Court in relation to the purported acquisition of €2∙1 billion in loans to the appellant companies by NAMA.

The appeal was brought on five grounds:

In January 2011, the High Court refused to approve an examiner’s rescue plan (“Scheme of Arrangement”) for construction company McInerney Homes Limited (“McInerney”), on the basis that the Scheme of Arrangement was unfairly prejudicial to the secured creditors consisting of a Banking Syndicate of Anglo Irish Bank Corporation Limited, Bank of Ireland plc and KBC Bank plc (the “Banks”).

TheCentral Bank and Credit Institutions (Resolution) Bill 2011 seeks to establish a more permanent and a wider framework for dealing with insolvent banks and banks in financial difficulty. It is intended that the legislation would replace and extend the provisions contained in the Credit Institutions (Stabilisation) Act 2010.

The new Bill was published to meet the end of February deadline set under the terms of the EU-IMF Financial Support Agreement.