As the Deputy is aware, for a debtor to avail of bankruptcy in any given jurisdiction he/she must first of all establish that jurisdiction as his/her centre of main interest (COMI). The establishment of COMI is a matter for the relevant authorities in the jurisdiction in which bankruptcy is sought. I am advised by NAMA that as a secured creditor, its debt recovery position has not been impacted by debtors declaring bankruptcy in the UK. I am further advised by NAMA that in the case of debtors directly managed by the Agency approximately 20 debtors have successfully applied for bankruptcy in the UK.
As previously advised to the House, NAMA in its position as a secured creditor is generally neutral on the locus of bankruptcy proceedings as long as location does not prejudice its potential recoveries from the bankruptee.
NAMA advises that the comparatively shorter duration of bankruptcy in the UK is not a consideration for it as the bankrupt's unsecured assets remain in the control of the bankruptcy trustee long after the bankrupt may have been discharged from bankruptcy and any failure to make full disclosure may result in the period of bankruptcy being extended, in the case of the UK beyond the initial one year period to such time as the bankrupt co-operates with the trustee-in-bankruptcy or the official receiver, which may be several years. NAMA advises that it is currently challenging the release from bankruptcy in Northern Ireland of one debtor in the Courts, due to non-cooperation with the bankruptcy trustee.
NAMA further advises that its position on the locus of bankruptcy proceedings is partially based on positive on-going engagement with several trustees in bankruptcy of NAMA debtors who have been adjudged bankrupt in the UK. The Agency points out that the bankruptcy regime in the UK is well established, sophisticated and that trustees in bankruptcy under the UK system possess extensive powers to compel production of legal and banking information, on a cross-border basis, from the bankrupt. These powers have been used in bankruptcy cases involving NAMA debtors to uncover significant undeclared assets of some debtors.
The position of unsecured creditors is fundamentally different. Unsecured creditors, whose claims are subordinate to that of secured creditors, may seek to bolster their position by pursuing bankruptcy proceedings against a debtor. It is worth noting that bankruptcy proceedings are rarely brought by secured creditors and usually in cases of non or lack of full disclosure.
In summary, NAMA does not see the success of developers declaring bankruptcy in the UK rather than Ireland as significantly prejudicing its potential recoveries from the bankruptees.