Bankruptcy in Ireland

The objective of bankruptcy law is to realize and distribute the bankrupt’s assets fairly amongst creditors. Protection of the debtor is very much a secondary objective.

All of the debtor’s assets vest in the Official Assignee (OA) who is appointed by the court.

Any property acquired by the debtor after being made bankrupt must be disclosed to the OA in whom it will vest.

The debtor commits an offence if he acts as an officer of any Irish company or of any foreign company with a business establishment in Ireland or has any role in the management of such a company without court permission.

The debtor cannot obtain credit of more than 630 Euro without disclosing that he is a bankrupt.

The debtor’s salary is likely to be attached in favour of the official assignee.

The bankruptcy may be discharged after twelve years provided certain conditions are met.

The conditions for discharge are:

1. The costs of the High Court petition are paid.
2. The costs, fees and expenses of the OA are paid including stamp duty on realisations.
3. Preferential creditors are paid.
4. Some funds are available to share among the general creditors.

There is no automatic discharge from bankruptcy but provided conditions (a) to (d) are met, a bankrupt person may seek discharge provided at least 60% of creditors by number and value agree to accept a payment from the debtor. Otherwise the bankruptcy continues and may a debtor may remain a bankrupt, even after his death.

Creditors frequently threaten bankruptcy to prompt a debtor into paying his debts but because of the huge cost and time which the process takes, very few creditors follow through on the threat. Frequently the debtor and creditors come to a private arrangement to address debts outside of the court or on occasion under the jurisdiction of the court but not in a formal bankruptcy.

Challenges to the length of bankruptcies have been made in the Irish courts but have failed. For example a period of fifteen years and counting was not deemed to be excessive in the case of Grace v Ireland. The duration of bankruptcy however may well be challenged in the courts again under the European Law on human rights.

Some minor changes to Irish Bankruptcy laws are currently being made by the Irish government but these are so trivial that there is expected to be little or no impact on insolvency in Ireland.