FINE Gael will overhaul Ireland’s outdated and job-destroying bankruptcy laws, and has published a radical new policy to reduce the statutory bankruptcy period from 12 years to three, Fine Gael Innovation & Research Spokesperson Deirdre Clune TD has announced.
“Irish bankruptcy laws are simply not fit for propose. They are of little benefit to creditors and work against companies, which are trying to stay afloat and save jobs. The examinership process should be a vital lifeline for struggling companies by providing a straightforward business restructuring, but this option is far too expensive for most SMEs.
“Even though 2010 was a record year for business closures (1,525), the examinership process was only used 16 times which is a new low for recent years. The 12-year bankruptcy period is far too penal, and can prevent talented entrepreneurs from going back into business.
“Last year was one of the toughest ever for Irish businesses, with record numbers closing down. Many companies are still facing severe cash flow problems and are experiencing mounting problems with debt.
“Fine Gael is proposing to overhaul Irish bankruptcy laws and establish new legal processes to deal with personal and commercial over-indebtedness to avoid the bankruptcy process in the first instance. This will be built around four key pillars.
“We will set up a flexible bankruptcy system, similar to Northern Ireland. The courts will be able to set bankruptcy terms depending on each individual’s circumstances. Restriction orders will be issued in conjunction with a longer bankruptcy period to act as a punishment and deterrent against bad behaviour.
“Fine Gael will develop a system for Out of Court Debt Settlements that offers a route for businesses who are owed money to demand payment. They will be able to use an officer of the courts to force a settlement, with no implications for the debtor if payment is made.
“We will set Individual Voluntary Debt Plans, establishing a new legally binding arrangement where an indebted individual and their creditors agree to have a plan drawn up by a certified insolvency professional or practitioner to restructure the individual’s outstanding debts.
“And Commercial Voluntary Debt Plans will establish a new system to help small firms struggling in the recession to restructure their business, and their debt, with the help of professional insolvency practitioners while under the protection of the State. This will avoid the excessive cost of the examinership process.”