Appointment of the Director of the Insolvency Service of Ireland.

The Minister for Justice and Equality, Mr Alan Shatter, T.D., today announced that he has appointed Mr Lorcan O’Connor to be the Director-designate of the Insolvency Service of Ireland. He will take up his post on 22 October, 2012.

The salary for the position of Director-designate of the Insolvency Service of Ireland  is as follows  –  €127,796 – €133,605 – €139,898 – €146,191


The Insolvency Service of Ireland (ISI) is a statutory body which will be set up to  under the Personal Insolvency Bill . It is expected that the Report and Final Stage will be completed in the Dáil in October.

The ISI will be responsible for all matters concerning personal insolvency, both judicial and non-judicial. Its main functions will be to provide and manage the processes necessary for the efficient operation of the new non-judicial debt settlement procedures being developed under the legislation; to determine applications for debt relief under the proposed Debt Relief Certificate process; to further develop insolvency policy and legislation; to develop guidelines for insolvency procedures; to provide necessary information to both the public and practitioners; and to develop and maintain appropriate statistics in regard to insolvency.


Mr O’Connor   is a Chartered Accountant and Business & Legal Studies graduate of UCD. He  has almost 15 years’ experience in the area of insolvency. He is a Council member and Treasurer of the Irish Society of Insolvency Practitioners. Between 2006 and 2008 he was seconded to the Department of Transport as the Department’s Financial Adviser.

Minister Shatter said, “I am delighted that Lorcan has accepted the appointment. As Director he will be the key driver of the delivery of the reform and will be required to bring together all of the critical elements – legislative and organisational – so as to ensure coherence in the ultimate development of the Service. He brings to the position a wealth of experience that equips him ideally for the many challenges that lie ahead.”

Mortgage Information and Advice Service

A new government  mortgage advisory service, which is to be  funded by the banks, is expected to begin work by the end of the summer. The Citizens Information Board will have the  overall co-ordinating role  of the   new advice service .

MABS  ( Money Advice and Budgetary Service ) will not have a role in the new mortgage advice service – even though they have years of experience in  providing  support for people in debts.

It is going to be confusing for people with mortgage problems – MABS is well known as the place to go if you have debt problems.

At the moment people in debt are advised by th egovernamnt and the banks to go to MABS

The MABS helpline  is 0761 07 2000 and is open from 9am to 8pm, Monday to Friday. MABS also operates a nationwide network of centres, staffed by specialist money advisers, as well as an email service


You can also contact your local Citizens Information Centre for face-to face information and advice, phone the Citizens Information Phone Service on 0761 07 4000, Monday to Friday, 9am to 9pm,

Insolvency Bill Approved by Cabinet

The Cabinet has today approved the publication of the Personal Insolvency Bill this Friday (June 29th)

Enda  Kenny said the legislation would give a clear incentive for the banks to sit down with borrowers and work out bilateral agreements for the first time.

He also confirmed the period of bankruptcy would be reduced from 12 years to three as a result of the new legislation.

The Bill, which is a requirement of the agreement with the IMF / EU and ECB  –  is expected to become law in the autumn.


Personal Insolvency Bill Expected by end of June

THE PERSONAL Insolvency Bill,  will be published by the end of June 2012  according to  Minister for Justice Alan Shatter .

Mr Shatter also said he hoped the Legal Services Regulation Bill would be enacted by the end of the year.

He said he hoped the Bill, when enacted, would encourage financial institutions to engage with people in debt in a realistic manner, without having to have recourse to the measures that would be contained in the Bill.


Insolvency Laws Not Due Until Autumn

Justice Minister – Alan Shatter  has said that he now expects the new insolvency legislation to come into force in the Autumn.

Only last week it was announced that  publication of the new legislation has been delayed until the end of June, even though the original target date was  the end of April.

A range of voluntary debt settlement systems are outlined in the draft version of the laws, as well as a plan to cut the period of bankruptcy from 12 years to three.

Minister Shatter said that ” we hope the second-stage debate on the Bill will commence in the Dáil in July.”



Insolvency Laws Need to be Carefully Drafted

The European Commission produced a report on Ireland this week – titled Economic Adjustment Programme for Ireland — Winter 2011 Review

They noted that ……

Progress continues to be made towards reforming the personal insolvency framework, including amendments to the Bankruptcy Act and the creation of structured non-judicial settlement and restructuring systems. An important element of the authorities’ strategy in this regard, as reflected in the Heads of the Personal Insolvency Bill approved by the government and published on 24th January 2011, is the proposed establishment of a dedicated Insolvency Service to oversee the main elements of the out-of-court debt resolution process. These include:

(i) debt relief certificates (DRCs). These certificates are intended to benefit persons who have no assets and no income and are unable to pay relatively small unsecured debts (the debt obligation needs to meet certain conditions, including being not larger than EUR 20,000);

(ii) debt settlement arrangements (DSAs). These are meant to allow the settlement of unsecured debts larger than EUR 20,000 between a debtor (who has income and assets) and two or more creditors; and

(iii) personal insolvency arrangements (PIAs), which allow for the agreed settlement and/or restructuring of both secured and unsecured debts larger than EUR 20,000 (up to a ceiling of EUR 3 million) between a debtor (who has income and assets) and one or more creditors.

The legislation will be carefully drafted to prevent expectations of debt forgiveness for solvent debtors. While the inclusion of secured debt (e.g. mortgages) in the non-judicial framework can be an important element in facilitating the development of adequate strategies to address the pertinent issue of mortgage distress, it should be carefully formulated in order to prevent an adverse impact on borrower behaviour and unintended consequences for the profitability of Irish banks.

Thus the authorities appropriately intend to permit DSAs and PIAs only on a voluntary basis so that the consent of the debtor and a majority of the creditors would be required.

As regards the reform of the 1988 Bankruptcy Act, the key element of the authorities’ strategy is the reduction of the automatic discharge period from the current 12 years to 3 years, which aims to make the bankruptcy process less punitive and costly for consumers, while ensuring that banks’ incentives to supply credit in future are not unduly affected. The discharge period can be extended to 8 years where the debtor has been uncooperative, dishonest or engaged in wrongful conduct. Provision is also made for income payment orders for up to 5 years from the bankruptcy discharge.

Following completion of on-going consultation with relevant government departments and the Attorney General and further refinement, the Personal Insolvency Bill is expected to be published in full by the end-April 2012 programme deadline.

Debt Forgiveness and Mortgages in Ireland

Ratings agency FITCH  has said that Debt forgiveness will be “the dominant factor shaping the Irish mortgage market” if the  proposed personal insolvency bill is made law.

Earlier this month, Moody’s rating agency said a quarter of all Irish mortgage debt was susceptible to being written down under proposals in the new personal insolvency legislation

The ratings agency said the proposals were “credit negative” for bonds backed by residential mortgages sold by Irish institutions.

Personal Insolvency Bill and interest rates.

In the Dail thi sweek – Enda Kenny was talking about mortgage debts and the proposed Personal Personal Insolvency Bill .
He said the ” negative equity generation” are directly impacted on by this issue. Thousands of people are in negative equity because of reckless lending processes in banks.

He also said that he “noted the comments of the Bank of Ireland which is moving back towards private funding, but I disagree with Mr. Richie Boucher, its chief executive, when he says Government personal insolvency legislation will increase interest rates for mortgage holders who are paying their way.”

Kenny continued … “The Personal Insolvency Bill is for those who have a series of difficulties across a spectrum of circumstances. It should be made clear, as the Bank of Ireland is aware, that the banks have been recapitalised to deal with mortgage distress and with circumstances where people are in serious difficulty with their mortgage. The Bill has been designed to deal with people in difficulty.”

“It is wrong to suggest, as I saw in a newspaper today, that the Personal Insolvency Bill will cause interest rates to rise for people who are paying their way and facing challenges in their mortgage. That is not the intention. The banks have been recapitalised to deal with cases in which the holders of a residential mortgage are in serious distress. It is a matter for the banks and lending institutions to sit down with individuals and work out the best prospect.

Mortgage Increases Possible if Insolvency Bill is Passed

If the new personal insolvency rules come into force in Ireland  lenders could be forced to raise mortgage rates to compensate for their extra losses.

Bank of Ireland boss Richie Boucher said  he was looking at raising the interest rates on variable mortgages to compensate for this added “risk”.

He said the new insolvency laws, due later this year, could mark a fundamental change in the playing field for banks (  in Ireland )and make mortgage lending more risky. He said  “We price for risk,” he said, implying that the cost could be passed on to customers in the form of higher interest rates.

About a third of Bank of Ireland’s mortgage holders are on variable rates, and at a typical rate of between 3.4pc and 3.84pc are already paying almost double the interest of those with tracker mortgages.

The threat of higher interest rates comes a week after ratings agency Moody’s said up to a quarter of the mortgages in Irish banks were vulnerable to being written down under the new insolvency rules .

New Insolvency Rules could make things Worse in Ireland

Citibank have produced a report  titled ‘Ireland: Tough times ahead’ – and in it  they say that Personal insolvency rates could rise  when the Insolvency Bill is passed and Ireland could  slip back into recession.

Citibank say —  “In our view, it is likely that personal insolvencies in Ireland will soar in the next year or two, with more use of default as a means of deleveraging, especially since long- term unemployment continues to rise in Ireland.”

Citibank based their assessment on what happened in the UK  when similar changes to insolvencies were introduced about 10 years ago. Despite strong economic growth, the number of insolvencies in the UK doubled between 2001 and 2006.

A knock-on effect of an increase in insolvencies would be a further tightening of lending by banks.

Rising insolvencies are likely to cause additional losses — perhaps substantial — for Ireland’s banks on consumer credit and mortgage loans, and also may feed back to rising interest rates and tighter lending standards as banks seek to protect themselves against rising credit risk.”