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Seanad Éireann díospóireacht -
Tuesday, 4 Dec 2012

Vol. 219 No. 5

Personal Insolvency Bill 2012: Committee Stage (Resumed)

I welcome the Minister back to the House.

SECTION 25
Government amendment No. 34:
In page 30, subsection (1), lines 15 to 17, to delete paragraph (a) and substitute the following:
"(a) such information as may be prescribed in relation to--
(i) his or her creditors,
(ii) his or her debts and other liabilities,
(iii) his or her assets, and
(iv) the efforts made by him or her to reach an alternative repayment arrangement with his or her creditors, and".

This amendment proposes to set out more clearly the information the debtor is required to provide for the approved intermediary in support of his or her application for a debt relief notice. It also includes a paragraph (a) for additional text which places an onus on the debtor to inform the approved intermediary of what efforts the debtor has made to reach alternative repayment arrangements with creditors prior to seeking a debt relief notice. While this may not be of significant concern, as such it serves as a useful indicator and could lead to a current or future Money Advice and Budgetary Service client for a debt relief notice being potentially diverted into an acceptable repayment arrangement with creditors and thus avoid the process altogether and some of the consequences. This approach would complement current MABS strengths and involvement in debt resolution.

I am sure this question can be very easily answered. I am aware that one of the concerns of some of the voluntary organisations revolves around the failure of the banks to deal with creditors and some of the tactics the banking sector has used to avoid creditors. I am personally aware of cases in which letters have gone unanswered for up to six months, if not longer; correspondence has been directed to one office and creditors who have telephoned about it have been told, "That is the wrong office, it needs to go somewhere else." Not to put too fine a point on it, there have been concerns that banks - in using that word I also include building societies - through different strategies have gone to extensive lengths to avoid communication with distressed borrowers. It is of concern that this requirement might stand in the way of genuine borrowers in distress being able to activate some of the provisions of the Bill. I am sure this concern is one the Minister will be very easily able to address.

It is of great importance that banks and financial institutions generally respond to debtors in financial difficulty. Clearly, in recent years there have been difficulties with some financial institutions. There has been a lack of uniformity in approach. There has also been a serious issue with staff training. The banks have engaged in some retraining and we have been given assurances that while they are releasing some staff, they will possibly be recruiting others who will have expertise in dealing with these issues. This may not be of major importance in the context of a debt relief notice which, if it comes to dealing with banks, will perhaps apply to small amounts of credit card debt as opposed to major debt, but it is of the utmost importance that banks have proper procedures in place and that they properly respond to individuals. It is important when individuals are travelling the route of one of the non-judicial debt settlement options that there is a possibility of a resolution without the necessity of formal arrangements being put in place.

What I seek is an assurance that the banks and other financial institutions will not be able to use the provisions of this legislation to frustrate the efforts of distressed borrowers by using their own internal processes, thus ensuring they do not deal with borrowers' attempts to reach a settlement.

I cannot give assurances on how an individual creditor is going to respond, but, clearly, banks have an interest in recouping moneys due to them. They are very aware of the fact that there is a substantial number in financial difficulty. We know debt forbearance arrangements have been utilised, reportedly, by in the region of 80,000 residential home mortgagees. Clearly, banks have been reacting and putting in place arrangements, many of which are of a temporary as opposed to a permanent nature. Some of the temporary arrangements put in place have facilitated individuals in working through what are immediate financial difficulties and there are a number of individuals for whom these arrangements were put in place and who are now back on an even financial keel. Banks, financial institutions and all creditors have an interest in trying to recoup moneys due to them. In the context of an individual who says he or she is in financial difficulty, any creditor would want confirmation of this by receiving full information. This is providing a structure to facilitate a structured arrangement where the debts in the context of a debt relief notice amount to no more than €20,000 or, if they are at a higher level, under the debt settlement or personal insolvency arrangement.

Amendment agreed to.

I move amendment No. 35:

In page 30, subsection (2)(c), line 31, after "particular," to insert the following:

"negotiation with a creditor or creditors with a view to restructuring the terms of a debt owed, including write-downs, reductions of interest rates, lengthening of maturities, to that creditor or creditors, whether as part of any arrears process otherwise,".

The Senator should ensure he has the right version of the Bill, as I had the wrong one initially. We are dealing with the Bill as passed by the Dáil, not the Bill as initiated.

I thank the Senator for his assistance.

I have the right one and apologise for the delay.

The objective of the amendment is for the debtor to be advised of options that may not be in the Bill which could be offered by any creditor, such as write-downs, reductions of interest rates, lengthening of maturities or matters along those lines. It would ensure that the debtor has full information before engaging in the debt relief process, which is important. When the creditor has a monopoly of information he or she could have more power; therefore, the debtor needs to have as much information as possible to put him or her in a fairer position. It is to ensure a level playing field in respect of information and access to information. That is the logic of the amendment.

Although well intended, the Senator's amendment appears to miss the point of the debt relief notice process. That was the case in the context of an amendment we dealt with on a previous day. The approved intermediary is required to advise the debtor as to the consequences of the application for debt relief notice, the criteria applicable and whether a different debt resolution process might not be more appropriate to his or her situation. Becoming party to another debt process will likely involve the elements set out by the Senators. However, there is no requirement to list them in this section, which deals with the provision of information and advice as to the debtor's options - that is, the potential negotiating strategy to be arranged by a personal insolvency practitioner, PIP, in one of the other two processes.

It strikes me that the Senator's amendment is almost identical to the Irish negotiating position with the European financial institutions.

Amendment put and declared lost.

Government amendments No. 36 and 49 are related and may be discussed together.

Government amendment No. 36:
In page 31, lines 28 to 46 and in page 32, lines 1 to 3, to delete subsections (9) and (10) and substitute the following:
(9) Where an approved intermediary resigns from the role of approved intermediary as respects a debtor, he or she shall notify the Insolvency Service of that fact, which notification shall be accompanied by a statement of the reasons for his or her resignation.
(10) Where, at any time during the Debt Relief Notice process after the debtor has made the confirmation referred to in subsection (3), the approved intermediary concerned ("original approved intermediary")-
(a ) dies,
(b ) becomes incapable, through ill-health or otherwise, of performing the functions of an approved intermediary as respects the debtor,
(c ) resigns from the role of approved intermediary as respects the debtor, or
(d ) is no longer entitled to perform the functions of an approved intermediary under this Act,
the debtor shall, as soon as practicable after becoming aware of that fact, appoint another approved intermediary to act as his or her approved intermediary for the purposes of this Chapter.
(11) (a ) Where paragraph (a), (b) or (c) of subsection (10) applies, the debtor concerned shall, as soon as practicable, inform the Insolvency Service of that fact.
(b ) Where an approved intermediary has been appointed under subsection (10), the approved intermediary shall, as soon as practicable, inform the Insolvency Service of that fact.
(12) The Insolvency Service shall notify the creditors concerned where it is made aware under subsection (9) or (11) that -
(a ) paragraph (a), (b), (c) or (d) of subsection (10) applies, or
(b ) an approved intermediary has been appointed under subsection (10).

Amendment No. 36 is recommended by the Parliamentary Counsel. It improves the text of those subsections in section 25 dealing with situations in which an approved intermediary resigns or otherwise becomes unavailable to continue acting as such for the debtor. Essentially, the required notifications to be made by parties concerned are set out in a clearer fashion. Subsection (9) now provides that if an approved intermediary resigns from the role in respect of a debtor he or she shall be required to notify the Insolvency Service of that fact. The debtor must inform the Insolvency Service of any new appointment.

Amendment No. 49 is similar. It substitutes the current subsections 46(4) to 46(7) with new text regarding the appointment of PIPs. These amendments are required to improve the overall presentation of the section for clarity and for consistency of approach with the amendments to section 25 regarding approved intermediaries. The main change is that the new subsection (8) provides that the debtor is only required to notify the Insolvency Service if his or her PIP dies, becomes incapacitated or resigns.

I am concerned about the requirement in subsection (9) that the notification shall be accompanied by a statement of the reasons for the practitioner's resignation. Suppose these reasons were to the disadvantage of the debtor. Is it appropriate that the approved intermediary be forced to give these reasons? I would have assumed that client confidentiality would be involved. If there is something disadvantageous to the debtor, should he or she have to give that information?

If an individual who has assumed a role as a PIP to resolve issues between debtors and creditors chooses to resign and not fulfil his or her duties, it is reasonable that he or she give an explanation. At a later stage we will come to the extensive provisions concerning the regulation of PIPs and issues that can arise with regard to the attainment of the position, circumstances in which there may be an inspection of their books and circumstances in which some sort of disciplinary process may take place. I do not think we can have a situation in which individuals who assume the role of PIP can simply resign mid-process without an explanation of any nature, to the detriment of both debtors and creditors.

It may well be that a person resigns on the basis that he or she is not able to fulfil his or her function, perhaps because the debtor is not providing the background information necessary to deal with matters. There would have to be some transparency if that truly was the case. It is important that we do not create a mechanism whereby individuals who are licensed to be PIPs and have assumed that duty can arbitrarily and without any explanation stand aside to the detriment of everyone concerned. Obviously, if a reason is given to the Insolvency Service that is a matter for the Insolvency Service, whether another individual is appointed to replace the PIP. Ultimately it will be a matter for the debtor; the resignation of one person does not prejudice engagement by another individual. Of course, the circumstances in which a resignation takes place may influence creditors, who may take the view that they will not engage as there is no purpose in the context of that particular issue.

May I raise another point that may be helpful? I am concerned that the debtor should not be disadvantaged. It seems there is an omission in the sense that the notification, according to the amendment, appears only to be made to the Insolvency Service. Would the Minister be disposed to tabling an amendment or accepting one from this side to say that notification should also be made to the debtor? That may be an oversight. I would have thought the debtor should have a right to any statement that might prejudice his or her interest. For example, if one assumes that the PIP follows the natural profile of the human animal, which is not always savoury, he or she may not have performed the duties correctly and may want to malign the former client in the manner of his or her leaving. In such a case, I would have thought it was a natural right for the client - the debtor - to have equal right of access to that information. I wonder whether it would not be appropriate to expect the intermediary also to include the debtor in the notice that he or she is terminating the position, as well as providing the reasons involved, which would allow the debtor to challenge them if he or she did not agree with them.

I assume that because the PIP will initially be appointed by the debtor, in the case of resignation he or she will inform the debtor. I draw the Senator's attention to subsection (10), which provides that where a PIP dies, becomes incapable through ill-health or resigns from the role of PIP the debtor shall, as soon as practicable after becoming aware of that fact, appoint another PIP. I assume that a PIP who resigns will inform the debtor because he or she would initially have been approached and appointed by the debtor. I will reflect on what the Senator said as to whether some express provision should be included in the legislation to ensure, if the Insolvency Service is informed, that at the very minimum the debtor is also informed. I would think, frankly, that both debtors and creditors should be informed. Somebody could resign at a point where he or she has only initiated the process and engaged with the debtor. Let us assume for a moment that one has engaged with an individual who has asked one to act as a PIP, but after the first couple of meetings one discovers that this is an individual who is not co-operating and is not providing information that is required. One might not yet have approached creditors, and for that reason one could decide to say at that point, “Thank you very much; I am out of this.”

Clearly, a PIP must be able to make that judgment. He or she cannot be compelled to engage with a debtor who clearly is unco-operative and may only have asked for his or her engagement to prolong the agony of creditors who are properly due money.

I will reflect on what the Senator is saying about whether a brief amendment should be made on Report Stage clearly stating that the debtor should be informed.

I would be grateful if the Minister would. I am aware of cases where people professionally engaged as advisers resigned without giving a reason and the person who secured their services learned about it from the media surrounded by suggestions that were not to the advantage of the person who secured the services in the first place. It happens.

Amendment agreed to.

I move amendment No. 37:

In page 32, between lines 14 and 15, to insert the following subsection:

"(12) The debtor is guaranteed the right, at all times during the insolvency process, to open and operate any bank account (including online banking facilities) provided by a banking institution registered in the State.".

This amendment relates to the right to open a bank account. The reason I tabled the amendment is an article about the Bill in the Sunday Business Post on 7 October by Eoin Collins in which he stated:

One overlooked possible improvement in the legislation would have been to guarantee the right to operate a bank account. Surprisingly, this is still a difficulty for many undischarged bankrupts in the Republic unlike in Britain and the North. Life without a bank account in the modern world goes beyond a mere inconvenience and one wonders at the public policy logic for compelling people known to be in financial difficulty to operate on a cash only basis.

I am not sure why there is an insistence on this but it would be a logical improvement to the legislation if we were able to protect somebody with a guarantee of a bank account. Operating on cash-only basis is not possible in the modern world. I do not know how anyone would feed his or her family on such a basis. Having been in the grocery business, I am aware that few cheques are used nowadays and in future the likely use of identification will be on an optical or fingerprint basis, rather than through credit or debit cards. If there is a difficulty with having a bank account, it makes it almost impossible to feed a family. I am not sure whether the wording I have used is correct but, based on the newspaper article, there is a difficulty here compared with the North. The legislation should enable somebody to at least have the right to open a bank account.

I am generally in agreement with the sentiments expressed in the amendment. However, the Bankruptcy Act 1988 contains no prohibition on the holding of a bank account by a bankrupt, although many people believe it does. An individual's affairs are currently subject to scrutiny by the official assignee in bankruptcy and, in practice, financial institutions have not been enthusiastic to allow individuals in bankruptcy to open a new account for obvious reasons. I am exploring with the offices of the Attorney General and the Parliamentary Counsel whether I can impose what could be described as a positive right to open or continue to operate a bank account on financial institutions. If possible, I will bring forward a suitable Report Stage amendment.

The amendment makes reference to an individual debtor being guaranteed the right "to open and operate any bank account ... provided by a banking institution". In circumstances where an individual is insolvent, a DSA or a PIA will be in place and it is envisaged that, over a period of years, various payments will be made to creditors. Under a PIA, mortgage repayments will be made to financial institutions while unsecured debt due to such institutions will be paid under a DSA. Clearly, it will suit the debtor and creditors, in particular, financial institutions to have money going into a bank account which is used to distribute payments. The notion that individuals may be forced to wander around handing out wads of cash in this day and age is bizarre.

There are, however, a number of problems with the amendment. No financial institution is compelled to allow any individual, solvent or insolvent, to open an account. If there is a right to open an account, where will it be exercised? Will it be imposed on, for example, Bank of Ireland or AIB or will every financial institution be under an obligation to allow an individual to open at least one account where he or she can establish he or she has no current functioning accounts? What will be the nature of the account? If there was to be an account for an individual who is insolvent and a party to one of the new settlement arrangements, it would have to be what the Americans call a debit account. Our banks are suddenly recognising customers should have debit cards rather than Laser or credit cards. Up until recently, most people used Laser cards to get cash and credit cards but in the US, for many years, individuals have had access to bank accounts with no overdraft facility on which they have a debit card to make payments. That is the ideal account for an insolvent individual to ensure he or she does not again overreach and spend money he or she does not have.

There is merit in the amendment but it does not work, as drafted, because it is open to the suggestion that banks could be compelled to allow people to run current accounts with overdrafts at unspecified interest rates but we are in consultation with the Attorney General about this. There is a practical and reasonable need for individuals to have access to a debit account with no overdraft facility, which would facilitate both the making and receipt of payments, and I hope we can return to that issue on Report Stage.

I appreciate the Minister's sympathy with the issue raised. I recognise it would be difficult to compel a bank to open accounts. However, I appreciate the Minister's offer to consult the Attorney General about whether it is possible to use debit accounts. Banks cannot be forced to automatically grant overdraft facilities to somebody who is insolvent and I hope the Minister can come up with a solution to the problem.

I support Senator Quinn's comments. It is a good proposal and I welcome the Minister's response. Perhaps an obligation could be placed on the debtor when opening an account to inform all parties to the insolvency arrangements.

I understand the motivation behind the amendment to make life easier, particularly in the repayment of debt. However, I was struck by the use of the word "any", when I read the amendment first, which seems to be broad. I was going to whisper to Senator Quinn that perhaps he should take it out but then I thought my advice might not be well timed because he knows more about finance than I do. However, it appears as if that is part of the problem because it would be strange, as the Minster said, to allow somebody to open a bank account with extensive credit facilities. I had not thought about this, until he drew it to the attention of the House, but it would be absurd to privilege debtors over ordinary citizens. If the amendment were accepted, the Minister would grant automatic rights to a bank account to a debtor, which do not exist for the ordinary citizen. I do not see any reason for privileging debtors until each citizen has been declared a debtor, in which case there would be equality. That day may be sooner than we think.

The amendment is interesting. I fully accept the logic of the Minister's response, as has the Senator who proposed the amendment. The Minister said he would revert to me on Report Stage having received advice from the Attorney General on this issue. What will be the status of the bank accounts of those in debt relief arrangements? Will the bank accounts be frozen, for example? What will happen the personal account of a debtor who owes €5,000, €10,000 or €20,000, for example? I include accounts with small sums.

We had a discussion on net disposable income and reasonable household expenses, etc. Although we disagreed on the figures, we accept people necessarily incur living expenses that must be drawn from disposable income. As the amendment implies, people must have bank accounts. It would help me to know what happens to their bank accounts when they require debt relief. How will they fit into the scheme?

That is reasonably straightforward. An existing bank account will either be in the black or the red. If it is in the black, the money in it comprises part of the overall resources. Where there is a debt settlement or personal insolvency arrangement, there will be engagement with the personal insolvency practitioner who will make, having obtained a full disclosure, proposals to creditors as to what arrangements might be put in place. If an account is very much in the black, despite the existence of a range of other debts overshadowing the account, some of the money in it might have to go into the pot to pay the creditors. Other sums therein may not. There is nothing in the legislation stipulating the freezing of a bank account, but, clearly, if one's bank account is in the red, one's personal insolvency practitioner will have to notify the financial institution. I presume that if the financial institution is giving the debtor some leverage to have an overdraft, it will put a stop to the overdraft growing further during the process. Ultimately, it will be for the financial institution to determine whether the account will continue to be operated; there is nothing in the legislation stating it should not. I presume financial institutions that want to be paid will see an advantage in maintaining an account if the account holder is in employment and has a salary paid into it. I presume the financial institutions will want to put a block on an overdraft facility because one could not have somebody in that arrangement building an overdraft and paying the financial obligations that arise pursuant to the arrangement. There is nothing in the legislation stating a debtor party to a debt settlement or personal insolvency arrangement cannot maintain an account. However, one cannot run up debt.

I accept what the Minister said and Senator David Cullinane has confirmed that view.

We discussed the credit union legislation about an hour ago. I do not see credit unions mentioned in the Personal Insolvency Bill. The debt relief discussions take place with the banks. Perhaps there is oversight or credit unions have been mentioned, but I would like to ensure they were not excluded from the discussions.

Banks are not mentioned particularly either. There have obviously been engagements with the credit union movement and financial institutions. As I kept raising in the context of the debt relief notice, credit union debts are all unsecured, excluding the security of what is held on deposit. There is a provision in the legislation stipulating that where one has €3,000 on deposit in a credit union and €9,000 in borrowings, one's debt is effectively €6,000. The credit union is entitled to gain access to what is on deposit. Under the terms of the legislation in dealing with debt relief notices, for example, there is express provision that an individual cannot run up more than €650 in debt to a financial institution while in a debt relief arrangement during the period of that arrangement. The extent to which additional debt can be incurred during the period of years during which one is covered by a debt relief notice is clear.

Amendment, by leave, withdrawn.
Section 25, as amended, agreed to.
NEW SECTION
Government amendment No. 38:
26.—(1) A Debt Relief Notice shall be issued in respect of an excludable debt only where the creditor concerned has consented, or is deemed to have consented, in accordance with this section, to the issue of such a Debt Relief Notice.
(2) Where a debtor who wishes an application under section 26 to be made on his or her behalf wishes the Debt Relief Notice concerned to be issued in respect of an excludable debt, the approved intermediary concerned shall, without delay, notify the creditor concerned of that fact, which notification shall be accompanied by—
(a) such information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed, and
(b) a request in writing that the creditor confirm, in writing, whether or not the creditor consents, for the purposes of this section, to the Debt Relief Notice being issued in respect of the debt.
(3) A creditor shall comply with a request under subsection (2)(b) within 21 days of receipt of the notification under that subsection.
(4) Where a creditor does not comply with subsection (3), the creditor shall be deemed to have consented to the issue of a Debt Relief Notice in respect of the debt concerned.
(5) In this Chapter, “permitted debt” means an excludable debt to which subsection (1) applies.”.
Amendment agreed to.
SECTION 26
Government amendment No. 39:
In page 32, subsection (2)(d), to delete lines 34 to 37 and substitute the following:
"(i) the amount of each debt due to that creditor,
(ii) whether the creditor concerned is a secured creditor and, if so, the details of any security held in respect of the debt concerned, and
(iii) where the debt is an excludable debt, whether the creditor has consented, in accordance with section 26, to the issue of a Debt Relief Notice in respect of that debt;".
Amendment agreed to.

Amendments Nos. 40 to 42, inclusive, 54 and 95 are related and are to be discussed together.

Government amendment No. 40:
In page 33, between lines 26 and 27, to insert the following subsection:
“(5) An application under this section may be withdrawn by the approved intermediary at any time prior to the issue of a Debt Relief Notice under section 28.”.

Amendment No. 40 provides that an application for a debt relief notice may be withdrawn by the approved intermediary at any time prior to the issue of a debt relief notice by the insolvency service under section 28. These potential circumstances are not addressed in this Part of the Bill and, consequently, the provision is required for the avoidance of doubt.

Amendment No. 41 proposes the deletion of section 28 and its substitution with a new section 28 which has been redrafted to address a lacuna in the existing text. The new text makes provision for circumstances where a debt relief notice application is referred to the insolvency service and the service is dissatisfied with the application. Section 28(1)(b) provides that, in such cases, the insolvency service is required to inform the approved intermediary. Subsection (2) provides for circumstances where the court refuses an application for a debt relief notice. Subsection (3) makes provision for the appropriate court where it requires further information or evidence for the purpose of arriving at a decision under subsection (2) to hold a hearing on the matter. Subsection (4) makes provision for the hearing not to be held in public unless the court decides otherwise. Subsection (5) requires the court to notify the insolvency service of its decision to issue a debt relief notice, to refuse an application or to hold a hearing, as the case may be.

Amendment No. 42 is a drafting amendment. It amends the cross-referencing in regard to the court notification arising from the new text in section 28.

Amendment No. 54 inserts two new subsections in section 54 to improve the text. The new subsection (3) provides that an application for a debt settlement arrangement may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate. Again, this is not made clear in the Bill, as it stands. The new subsection (4) places an obligation on the personal insolvency practitioner to notify the insolvency service as soon as is practicable after he or she becomes aware of an accuracy or omission in an application for a protective certificate. The insolvency service is required to have regard to any such information provided under subsection (4) for the purposes of its consideration of the debtor's application.

Amendment No. 95 inserts two new subsections in section 89. The new subsection (3) provides that an application for a personal insolvency arrangement may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate. This is not made clear in the Bill, as it stands. The new subsection (4) places an obligation on the personal insolvency practitioner to notify the insolvency service as soon as is practicable if he or she becomes aware of an inaccuracy or omission in an application for a protective certificate. The insolvency service is required to have regard to any such information provided under subsection (4) for the purposes of its consideration of the debtor's application.

SECTION 30

SECTION 33

Amendment agreed to.
Section 26, as amended, agreed to.
Section 27 agreed to.
SECTION 28
Government amendment No. 41:
In page 34, lines 38 to 45 and in page 35, lines 1 to 8, to delete subsections (1) to (3) and substitute the following:
“28.—(1) Where the Insolvency Service, following its consideration under section 27—
(a) is satisfied that an application under section 26 is in order, it shall—
(i) issue a certificate to that effect,
(ii) furnish that certificate together with a copy of the application and supporting documentation to the appropriate court, and
(iii) notify the approved intermediary to that effect, and
(b) is not so satisfied, it shall notify the approved intermediary to that effect.
(2) Where the appropriate court receives the application and accompanying documentation pursuant to subsection (1)(a), it shall consider the application and documentation and, subject to subsection (3)—
(a) if satisfied that the criteria specified in section 24(2) have been satisfied, shall issue a Debt Relief Notice in respect of the debts specified in the application under section 26 which it is satisfied are qualifying debts, and
(b) if not so satisfied, shall refuse to issue a Debt Relief Notice.
(3) The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision under subsection (2), may hold a hearing, which hearing shall be on notice to the Insolvency Service and the approved intermediary concerned.
(4) A hearing referred to in subsection (3), unless the appropriate court considers it appropriate to hold it in public, shall be held otherwise than in public.
(5) The registrar of the appropriate court shall notify the Insolvency Service where the appropriate court—
(a) issues a Debt Relief Notice under this section,
(b) refuses an application under subsection (2)(b), or
(c) decides to hold a hearing referred to in subsection (3).”.
Amendment agreed to.
Section 28, as amended, agreed to.
Section 29 agreed to.
Government amendment No. 42:
In page 35, subsection (1), line 21, to delete “section 28(3)” and substitute “section 28(5)(a)”.
Amendment agreed to.
Section 30, as amended, agreed to.
Sections 31 and 32 agreed to.
Government amendment No. 43:
In page 38, lines 29 to 35, to delete subsection (3) and substitute the following:
“(3) Subject to subsections (4) and (5), a specified debtor whose income increases by €400 or more per month during the supervision period concerned shall surrender to the Insolvency Service 50 per cent of that increase.
(4) The reference in subsection (3) to a specified debtor's income is a reference to his or her income as stated in the information provided, or documents submitted by him or her, or on his or her behalf, under section 26, less the following deductions (where applicable):
(a) income tax;
(b) social insurance contributions;
(c) payments made by him or her in respect of excluded debts;
(d) payments made by him or her in respect of excludable debts that are not permitted debts;
(e) such other levies and charges on the specified debtor's income as may be prescribed.”.

This amendment provides for the replacement of the sections 33(3) and (4). The amendment essentially improves the text by making clear how the debtor's income is to be calculated for potential repayment where there has been an increase in such income. It also takes account of the new provisions regarding excluded and excludable debts and how these are to be treated in such circumstances.

Amendment agreed to.
Section 33, as amended, agreed to.
SECTION 34

Amendments Nos. 44 and 45 are related and may be discussed together.

Government amendment No. 44:
In page 39, lines 13 and 14, to delete subsection (4).

Amendment No. 44 is a drafting amendment. The previous provision concerned in section 34 is now to be dealt with by a revised section 35. Amendment No. 45 proposes the deletion of the existing section 35 and its replacement with revised text. The amendment improves the text of the existing section 35 in regard to situations in the debt relief notice process when a possible payment to creditors becomes available. The primary change is to mirror the now possible inclusion of certain previously excluded debts in a debt relief notice. In recognition of that possibility such creditors deemed to hold permitted debts, that is, those excluded debts which the creditors have agreed to include and write off, will receive priority over creditors if some funds become available. Realistically, I do not expect that such repayment will be a major feature of the debt relief notice process given its nature and the likely economic position of the applicants. The rest of the provisions are essentially technical.

Amendment agreed to.
Section 34, as amended, agreed to.
NEW SECTION
Government amendment No. 45:
In page 39, before section 35, to insert the following new section:
35.—(1) The Insolvency Service, on receipt of a sum under subsection (2) or (3) of section 33 or under section 34, shall deal with that sum in accordance with this section.
(2) On receipt of a sum referred to in subsection (1), the Insolvency Service shall, subject to subsection (3)—
(a) apportion that sum, on a pari passu basis, among the specified creditors to whom a specified qualifying debt that is a permitted debt is owed, and
(b) within one month of such receipt, transmit to each such specified creditor payment of the sum apportioned to that creditor under paragraph (a).
(3) Where, following a payment or payments to specified creditors under subsection (2) or subsection (4), as the case may be, all of the specified qualifying debts referred to in subsection (2) have been paid in full, the Insolvency Service shall, in relation to a sum referred to in subsection (1)—
(a) apportion that sum, on a pari passu basis, among the remaining specified creditors concerned, and
(b) within one month of such receipt, transmit to each such specified creditor payment of the sum apportioned to that creditor under paragraph (a).
(4) Where the Insolvency Service—
(a) has apportioned a sum to a specified creditor under subsection (2)(a) or (3)(a), as the case may be, and
(b) after reasonable efforts, is unable to locate that specified creditor,
it shall apportion the sum referred to in paragraph (a) among the specified creditors referred to in subsection (2)(a) or (3)(a), as the case may be, whom it has succeeded in locating and, within one month of doing so, shall transmit to each such specified creditor payment of the sum so apportioned.
(5) Where a specified qualifying debt is secured, the Insolvency Service, in apportioning a sum to the specified creditor concerned under subsection (2)(a), (3)(a) or (4), shall disregard the value of the security held by the specified creditor for that debt.”.”
Amendment agreed to.
Section 35 deleted.
Sections 36 to 40, inclusive, agreed to.
SECTION 41
Government amendment No. 46:
In page 42, subsection (4)(e), line 35, to delete “as the court thinks fit” and substitute “as it deems appropriate”.

This is a technical drafting amendment required to ensure consistency of approach in the terminology used.

Amendment agreed to.
Section 41, as amended, agreed to.
Sections 42 and 43 agreed to.
SECTION 44

I move amendment No. 47:

In page 44, subsection (5), line 10, after “intermediaries” to insert the following:

“and the withdrawal of authorisation of such persons”.

This amendment is based on a suggestion made on Report Stage in the Dáil by our colleague Deputy Pádraig Mac Lochlainn. It proposes to take into consideration if someone who has been given the power to be an approved intermediary loses that status. The Minister thanked the Deputy for this observation and said he would come to the Seanad with an amendment to address this matter. We have not seen such an amendment coming through the Seanad which is why we brought forward our amendment. It is important the withdrawal of authorisation from someone who was appointed an intermediary and loses his or her authority needs to be added to the legislation.

I thank the Senator for raising this issue, as I did his colleague in the Dáil. This proposal adding this provision regarding approved intermediaries seems sensible. However, the Parliamentary Counsel has advised it may be prudent to await the final determination of the regulatory approach to personal insolvency practitioners which may lead to some further adjustment of this particular section. Later, we will insert a large section into Part 5 dealing with personal insolvency practitioners. Once this occurs the Parliamentary Counsel wants to reflect on this amendment. I invite the Senator to withdraw this amendment and bring it back to us on Report Stage. I expect we may have some other issues to address also but, if not, I will have no difficulty taking on the Senator's amendment.

I welcome the Minister's response and I am glad we are in agreement on the actual principle of this amendment. What he has suggested is fair and just.

Amendment, by leave, withdrawn.
Section 44 agreed to.
Section 45 agreed to.
SECTION 46
Government amendment No. 48:
In page 44, lines 29 to 35, to delete subsection (1) and substitute the following:
“46.—(1) A debtor to whom section 45 applies shall submit to a personal insolvency practitioner a written statement disclosing all of the debtor's financial affairs, which statement shall include—
(a) such information as may be prescribed in relation to—
(i) his or her creditors,
(ii) his or her debts and other liabilities,
(iii) his or her assets, and
(iv) guarantees (if any) given by the debtor in respect of—
(I) his or her own debts, and
(II) a debt of another person,
and
(b) such other financial information as may be prescribed.”.

This amendment substitutes the existing text of section 46(1) with new text regarding the information which the debtor is required to provide to the personal insolvency practitioner on his or her financial affairs. It will now include a requirement of the disclosure of details of any guarantees given to or by the debtor. The amendment is intended to improve the overall presentation of the section and to ensure necessary clarity.

Amendment agreed to.
Government amendment No. 49:
In page 45, lines 15 to 39, to delete subsections (4) to (6) and substitute the following:
“(4) On being appointed under subsection (3), the personal insolvency practitioner shall—
(a) confirm in writing to the debtor that the personal insolvency practitioner has consented to act in the role of personal insolvency practitioner as respects the debtor, and
(b) notify the Insolvency Service of his or her appointment.
(5) Where a personal insolvency practitioner is appointed under subsection (3), he or she shall stand appointed, and the debtor concerned shall not appoint another personal insolvency practitioner under that subsection, until such time as—
(a) the debtor concerned requests him or her to resign from the role of personal insolvency practitioner as respects the debtor, or
(b) the personal insolvency practitioner resigns from that role.
(6) Where a personal insolvency practitioner resigns from the role of personal insolvency practitioner as respects a debtor, he or she shall notify the Insolvency Service of that fact, which notification shall be accompanied by a statement of the reasons for his or her resignation.
(7) Where a personal insolvency practitioner appointed under subsection (3) (“original personal insolvency practitioner”)—
(a) dies,
(b) becomes incapable, through ill-health or otherwise, of performing the functions of a personal insolvency practitioner as respects the debtor,
(c) resigns from the role of personal insolvency practitioner as respects the debtor, or
(d) is no longer entitled to perform the functions of a personal insolvency practitioner under this Act,
the debtor shall, as soon as practicable after becoming aware of that fact, appoint another personal insolvency practitioner to act as his or her personal insolvency practitioner for the purposes of Chapter 3 or 4, as the case may be.
(8) (a) Where paragraph (a), (b) or (c) of subsection (7) applies, the debtor concerned shall, as soon as practicable, inform the Insolvency Service of that fact.
(b) Where a personal insolvency practitioner has been appointed under subsection (7), the personal insolvency practitioner shall, as soon as practicable, inform the Insolvency Service of that fact.
(9) The Insolvency Service shall notify the creditors concerned where it is made aware under subsection (6) or (8) that—
(a) paragraph (a), (b), (c) or (d) of subsection (7) applies, or
(b) a personal insolvency practitioner has been appointed under subsection (7).”.
Amendment agreed to.
Section 46, as amended, agreed to.
Section 47 agreed to.
SECTION 48

Amendments Nos. 50, 76 and 127 are related and may be discussed together.

I move amendment No. 50:

In page 47, subsection (3)(d), line 48, after “secured” to insert “and contingent”.

Amendment No. 50 proposes that secured debts plus the litigated debts in a comprehensive settlement and the debt settlement would be settled by the PIP, personal insolvency practitioner, rather than going to court. I feel this supports the Minister's intention in this section and keeping matters out of the courts or bankruptcy proceedings.

Amendment No. 76 proposes to remove any doubt in the PIP's role in determining the debt settlement arrangements when it comes to contingent debts. I gather third party debt orders have been part of the UK system under its 1986 insolvency Act. The whole emphasis of these amendments is to support the Minister's intention with the PIPs and substitute litigation proceedings in bankruptcy cases with a conciliation process.

Amendment No. 127 is next. These are similar amendments and presumably this is why they are grouped together. My assistant wrote "no WGM factor" beside this amendment. I gather he meant no wig and gown merchant factor. These are the people we are trying to keep out of it as part of the overall objective. I put forward the amendment in case it is of help in the context we have described. The Minister has invented a conciliation process rather than a bankruptcy process and this is to be encouraged.

Whereas household debt was 40% of income in 1995, according to a Mr. Spooner it is now 176%. What the Minister is trying to do is absolutely necessary to remove all of that. I have no idea what would happen in the courts if debt to household income of 176% was being litigated. These amendments may help the Bill and this is the spirit in which they are offered.

The three amendments tabled by the Senator propose the insertion of a reference to contingent liabilities. For debts to be covered as specified debts in the context of a debt relief notice, a debt settlement arrangement or a personal insolvency arrangement, they must be revealed by the debtor to the personal insolvency practitioner at the commencement of the application process concerning such arrangements. These debts must include actual and contingent liabilities in so far as they are ascertainable. It is incumbent on the insolvency practitioner to check the full extent of debts and to advise the debtors accordingly. This includes contingent liabilities. I am somewhat puzzled about the need for the amendments and I do not believe they add anything that is necessary to the text. In the absence of a convincing explanation I am obliged to oppose the amendments.

Contingent liabilities are liabilities or debts to which regard must be shown. I understand the issues the Senator is raising but I do not believe the change is necessary in the context of the mechanisms available and the structure that has been provided, given the obligations of debtors to ensure full transparency in respect of their debt situation and any potential debts and the obligations of personal insolvency practitioners to get a full statement from a debtor in respect of liabilities, assets and income. I oppose the amendment for this reason.

I thank the Minister for his response. I will not press the amendments.

Amendment, by leave, withdrawn.
Section 48 agreed to.
Sections 49 to 52, inclusive, agreed to.
SECTION 53

I move amendment No. 51:

In page 49, subsection (1)(a)(i), line 16, after “domiciled” to insert “and ordinarily resident”.

It is a small suggestion. This is to broaden the definition and what we are trying to achieve is self-evident. Someone could be domiciled in the country but not ordinarily resident. We are suggesting that if someone is to be considered for a debt settlement arrangement then he or she should be ordinarily resident and should spend a substantial amount of his time in the State. It is simply to seek clarity on this section.

I do not believe this amendment is necessary and it could give rise to some confusion. Section 53 deals with the issue of ordinary residence. In the context of the interaction between "domiciled" and "ordinarily resident", I am advised that one cannot state that "domiciled" encompasses "ordinarily resident" since it does not necessarily do so. The concepts are separate. To be domiciled in the State means having a fixed and permanent home here, crucially with the intention of remaining here either permanently or, at least, indefinitely, or, if absent, with the intention of returning here. One can be domiciled in the State while resident in another state. If a person is ordinarily resident in the State it means that he or she resides here, which is largely a factual determination based on his or her actual residence. It is possible to be domiciled in the State without been ordinarily resident here. It is possible to be ordinarily resident here without being domiciled here. They are different legal concepts, well worked out and defined in a plethora of judgments from the Irish courts and worked through in other common law jurisdictions also.

Section 53(1)(a) provides two distinct alternatives. A debtor can be either domiciled in the State or ordinarily resident in the State or can have a place of business in the State pursuant to section 53(1)(a)(ii)(II). To add ordinarily resident to section 53(1)(a)(i) would make the provision and the possible alternatives unclear and unnecessarily introduce uncertainty. The provisions already reflect what I understand to be the Senator's intention. In the circumstances I cannot accept the Senator's amendment and I call on him to withdraw it.

Senator Ó Clochartaigh's amendment may unwittingly exclude a group of people who may seek relief. I have in mind, for the sake of argument, people who have gone to places such as Australia and Canada and who are distressed borrowers who may avail of these types of debt settlement arrangements. These may be cases involving reasonably small sums of money by comparison with some of the levels of debt that other people have. By inserting "and ordinarily resident" we would be excluding these people from the provisions.

I thank the Minister and the Senator for their clarification. The Minister has taken on board the sentiment of what we are trying to do, namely, to ensure those who are ordinarily resident are covered also. Since he has given us his assurance that he has-----

We have done this already. It is an either-or situation and included in the Bill already.

I accept the Minister's clarification and on that basis we will withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments Nos. 52, 75 and 77 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 52:

In page 49, subsection (1)(b), line 21, after “insolvent” to insert the following:

“, or clearly unable to pay his or her debts as they fall due and it is unlikely that he or she will do so for the duration of the payment plan, as certified by a Personal Insolvency Practitioner”.

This amendment refers to the criteria of personal insolvency arrangements. The Bill stipulates that to qualify for a debt settlement arrangement a debtor must be insolvent. In our view this should be broadened and made clearer. This is what we are seeking to do with amendment No. 52.

The objective of the change in the wording in amendment No. 75 is to compel the practitioner to do his or her job effectively. Section 77(2) states: "Where it appears to the personal insolvency practitioner concerned that there has been a material change in the debtor's circumstances which would affect his or her ability to make repayments under the Debt Settlement Arrangement, the personal insolvency practitioner (whether on his or her own initiative or at the request of a creditor) may call a meeting of creditors to be held in accordance with this section". We seek to insert "shall" instead of "may" to make it imperative. It appears the Minister took some note of this issue when it was debated in the Dáil. I would welcome his comments on this potential change.

Amendments Nos. 52, 75 and 77 are being discussed together. I will begin with amendment No. 52. As the Senator said, it seeks to add further qualification or explanation to the fact of a debtor being insolvent.

I am advised by the Parliamentary Counsel that the extra words are not necessary to qualify or explain the concept of being insolvent. The word "insolvent" is, of itself, sufficient and there is no need for the extra wording to be added, as proposed by the Senator. Sections 53 and 88 have been drafted in order that the eligibility criteria for entering into a debt settlement arrangement or a personal insolvency arrangement are all objective, factual and not based on opinion. The likelihood that a person would be able to become solvent in coming years is, by its nature, opinion based. We have, therefore, provided for this in section 50, under which the personal insolvency practitioner makes his or her statement of opinion, including on matters set out in section 50(d). Section 53 refers to this in subsection (1)(d). In other words, the eligibility criteria under section 53 are that the personal insolvency practitioner has given an opinion under section 50 of the likelihood of the debtor becoming solvent during the next five years. Therefore, I cannot accept the amendment.

Amendment No. 75 proposes to change "may" to "shall" in regard to the requirement on the personal insolvency practitioner in the context of proposing a variation of debt settlement arrangement and this may seem logical. However, there may be circumstances where a debtor's financial situation deteriorates so rapidly that termination of the arrangement seems imminent. In such a case, a statutory requirement for a meeting to be called might not be desirable. However, I am conscious that we should have regard to any consistency issues that may arise in the context of a similar provision in section 115 in respect of a variation in a personal insolvency arrangement. I wish to consider this point further with the Parliamentary Counsel and assure the Senators that any amendment necessary to achieve consistency, including their amendment, will be brought forward on Report Stage.

My amendment No. 77 is essentially a technical drafting amendment required for consistency of approach to the holding of creditors' meetings elsewhere in the Bill.

I accept what the Minister is saying on amendment No. 52 but on amendment No. 75, he already gave an assurance to Deputy Mac Lochlainn in the Dáil that he would consider the point further with the Parliamentary Counsel. I note that his response to amendment No.75 is almost identical to the one given then. Has the Minister had an opportunity to discuss the amendment with the Parliamentary Counsel? If not, my party would be willing to give the Minister space to do so and to introduce an amendment on Report Stage. I ask him to clarify why such an amendment was not brought forward in advance of the Bill being debated in the Seanad.

Essentially, the reason is that the Parliamentary Counsel has had to work on a very substantial number of amendments. There will be some further amendments coming forward on Report Stage and this is an issue to be revisited. A lot of the Parliamentary Counsel's time was spent, apart from dealing with the amendments we have already addressed, on the structure required for the regulatory framework for personal insolvency practitioners and also on the very specific provisions relating to the Circuit Court and the special judges. Unfortunately, there are some issues that have been left over to Report Stage.

I accept the Minister's bona fides on this question and, in that context, will withdraw amendment No. 75 at this point but will reserve the right to reintroduce it on Report Stage.

Amendment put and declared lost.
Question, "That section 53 stand part of the Bill," put and declared carried.
NEW SECTION
Government amendment No. 53:
In page 50, before section 54, to insert the following new section:
54.—(1) An excludable debt shall be included in a proposal for a Debt Settlement Arrangement only where the creditor concerned has consented, or is deemed to
have consented, in accordance with this section, to the inclusion of that debt in such a proposal.
(2) Where a personal insolvency practitioner proposes to include an excludable debt in a proposal for a Debt Settlement Arrangement, he or she shall, without
delay, notify the creditor concerned of that fact, which notification shall be accompanied by—
(a) such information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed, and
(b) a request in writing that the creditor confirm, in writing, whether or not the creditor consents, for the purposes of this section, to the inclusion of the
debt in a Debt Settlement Arrangement.
(3) Subject to subsection (6), a creditor shall comply with a request under subsection (2)(b) within 21 days of receipt of the notification under that subsection.
(4) Where a creditor does not comply with subsection (3), the creditor shall be deemed to have consented to the inclusion of that debt in a proposal for a Debt Settlement Arrangement.
(5) Where a creditor consents or is deemed to have consented, in accordance with this section, to the inclusion of an excludable debt in a proposal for a Debt Settlement Arrangement, that creditor shall be entitled to vote at any creditors’ meeting called to consider that proposal.
(6) Where the debtor concerned is the subject of a protective certificate, and a creditor to whom this section applies brings an application under section 58(1) in
respect of that protective certificate, the period referred to in subsection (3) shall not commence until the date on which the appropriate court determines the application.
(7) In this Chapter, “permitted debt” means an excludable debt to which subsection (1) applies.”.
Amendment agreed to.
SECTION 54
Government amendment No. 54:
In page 51, between lines 9 and 10, to insert the following subsections:
“(3) An application under this section may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate under section 56.
(4) Where a personal insolvency practitioner becomes aware of any inaccuracy or omission in an application under this section or any document accompanying such an application, he or she shall inform the Insolvency Service of this fact as soon as practicable and the Insolvency Service shall have regard to any information provided under this subsection for the purposes of its consideration of the application.”.
Amendment agreed to.
Section 54, as amended, agreed to.
Section 55 agreed to.
NEW SECTION

Amendments Nos. 55, 56 and 96 are related and may be discussed together.

Government amendment No. 55:
In page 52, before section 56, to insert the following new section:
56.—(1) Where the Insolvency Service, following its consideration under section 55—
(a) is satisfied that an application under section 54 is in order, it shall—
(i) issue a certificate to that effect,
(ii) furnish that certificate together with a copy of the application and supporting documentation to the appropriate court, and
(iii) notify the personal insolvency practitioner to that effect,
and
(b) is not so satisfied, it shall notify the personal insolvency practitioner to that effect and request him or her, within 21 days from the date of the notification, to submit a revised application or to confirm that the application has been withdrawn.
(2) Where the appropriate court receives the application for a protective certificate and accompanying documentation pursuant to subsection (1)(a), it shall consider the application and documentation and, subject to subsection (3)—
(a) if satisfied that the eligibility criteria specified in section 53 have been satisfied and the other relevant requirements relating to an application for the issue of a protective certificate have been met, shall issue a protective certificate, and
(b) if not so satisfied, shall refuse to issue a protective certificate.
(3) The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision under subsection (2), may hold a hearing, which
hearing shall be on notice to the Insolvency Service and the personal insolvency practitioner concerned.
(4) A hearing referred to in subsection (3), unless the appropriate court considers it appropriate to hold it in public, shall be held otherwise than in public.
(5) Subject to subsections (6) and (7) and section 71(2), a protective certificate shall be in force for a period of 70 days from the date of its issue.
(6) Where a protective certificate has been issued pursuant to subsection (2)(a), the appropriate court may, on application to that court by the personal insolvency
practitioner, extend the period of the protective certificate by an additional period not exceeding 40 days where—
(a) the debtor and the personal insolvency practitioner satisfy the court that they have acted in good faith and with reasonable expedition, and
(b) the court is satisfied that it is likely that a proposal for a Debt Settlement Arrangement which is likely—
(i) to be accepted by the creditors, and
(ii) to be successfully completed by the debtor, will be made if the extension is granted.
(7) Where a protective certificate has been issued pursuant to subsection (2)(a) or extended under subsection (6), the appropriate court may on application to that court extend the period of the protective certificate by a further additional period not exceeding 40 days where—
(a) the personal insolvency practitioner has been appointed in accordance with section 46(7), and
(b) the court is satisfied that the extension is necessary to enable the personal insolvency practitioner so appointed to perform his or her functions under this Chapter.
(8) A hearing held under subsection (7) shall be held with all due expedition.
(9) The period of a protective certificate may be extended under subsection (7) once only.
(10) The registrar of the appropriate court shall notify the Insolvency Service and the personal insolvency practitioner concerned where the court—
(a) issues or extends a protective certificate under this section,
(b) refuses to issue or extend a protective certificate under this section, or
(c) decides to hold a hearing referred to in subsection (3).
(11) Where a protective certificate is issued under this section, the Insolvency Service shall—
(a) enter details of the name and address of the debtor and the date of issue of the protective certificate, and
(b) where applicable, the extension under this section of the protective certificate, together with such other details as may be prescribed under section 128(3)(b), in the Register of Protective Certificates.
(12) On receipt of a notification under subsection (10) of a decision of the court referred to in that subsection, the personal insolvency practitioner shall notify each of the creditors specified in the schedule of creditors of that decision and, in the case of a decision to issue a protective certificate, the notification by the personal insolvency practitioner shall contain a statement—
(a) that the debtor intends to make a proposal for a Debt Settlement Arrangement,
(b) of the effect of the protective certificate under section 57, and
(c) of the right of the creditor under section 58 to appeal the issue of the protective certificate.
(13) Notwithstanding the provisions of subsections (5), (6) and (7), a protective certificate that is in force on the date on which a proposal for a Debt Settlement Arrangement is approved in accordance with section 68 shall continue in force until it ceases to have effect in accordance with section 71.
(14) A protective certificate issued under this section shall—
(a) specify—
(i) the name of the debtor who is the subject of it,
(ii) the debts (“specified debts”) which are subject to it, and
(iii) the name of each creditor to whom a specified debt is owed,
and
(b) contain such other information as may be prescribed.
(15) In considering an application under this section the appropriate court shall be entitled to treat a certificate issued by the Insolvency Service under subsection (1) as evidence of the matters certified therein.”.

Amendment No. 55 will replace the current section 56 and substitute it with an improved and extended text on the process whereby the Insolvency Service refers an application for a protective certificate in respect of a debt settlement arrangement to the court. The new elements concern situations where the Insolvency Service is dissatisfied with the application and may require a revised application where a court requires further information. Where a court decides to hold a hearing, it may hold it otherwise than in public.

Amendment No. 56 from Senator Darragh O'Brien would add a reference to the debtor being able to object to the court in regard to the issuance of a protective certificate. There is no need to extend this appeal facility to a debtor as the debtor would not be aggrieved by the issuing of a protective certificate sought on his or her behalf by an insolvency practitioner. Clearly, the provision of such a certificate is for the benefit of a debtor and there would be no reason for the debtor to want to have the certificate set aside. Consequently, I do not see how this issue arises. What is being proposed would make no sense and would only serve to negate efforts to reach a settlement. Effectively it would mean the debtor applying for the protection afforded to him or her by the court to be removed, which would be a very odd application to make. The Senator seeks to make a further addition in regard to how the court should make orders, taking into account all the circumstances of the debt. It is objectionable to suggest that the court would not operate on a just and reasonable basis. Also, the proposed addition might risk a court rejecting the protective certificate sought for the protection of the debtor and for that reason I am opposed to this amendment.

Amendment No. 96 is similar in purpose to amendment No. 55 and proposes the deletion of section 91 and its substitution with an improved and extended text in regard to the process whereby the Insolvency Service refers an application for a protective certificate in respect of a personal insolvency arrangement to the court.

Amendment No. 56 not moved.

Amendment agreed to.
Section 56 deleted.
Section 57 agreed to.
Section 58 agreed to.
SECTION 59

Amendments Nos. 57 and 58 are related and may be discussed together.

Government amendment No. 57:
In page 56, subsection (2)(a), line 26, to delete “debts;” and substitute “debts.”.

Amendments Nos. 57 and 58 are technical drafting amendments advised by the Parliamentary Counsel to improve the text.

Amendment agreed to.

Government amendment No. 58:
In page 56, subsection (2)(b)(ii), line 31, to delete “concerned;” and substitute “concerned.”.
Amendment agreed to.
Section 59, as amended, agreed to.
SECTION 60
Government amendment No. 59:
In page 57, subsection (2)(b), line 8, to delete “subject to paragraphs (c) and (d),”.
Amendment agreed to.
Government amendment No. 60:
In page 57, subsection (2), lines 13 to 49 and in page 58, lines 1 and 2, to delete paragraphs (c) and (d).
Amendment agreed to.
Government amendment No. 61:
In page 59, lines 3 to 10, to delete subsection (4) and substitute the following:
“(4) For the purposes of subsection (2)(f), and without prejudice to subsection (3), in determining whether a debtor would have sufficient income to maintain a reasonable standard of living for the debtor and his or her dependants under the Debt Settlement Arrangement, regard shall be had to any guidelines issued under section 23.”.
Amendment agreed to.
Section 60, as amended, agreed to.
SECTION 61
Government amendment No. 62:
In page 59, subsection (3), line 30, to delete “Arrangement,” and substitute “Arrangement, and subject to section 62,”.

Amendment No. 62 is a technical amendment. The same applies to amendment No. 102.

Amendment agreed to.

Amendments Nos. 63 and 103 are related and may be discussed together.

Government amendment No. 63:
In page 59, between lines 33 and 34, to insert the following subsection:
“(4) Unless provision is otherwise made in the Debt Settlement Arrangement, where an Arrangement provides for payments to a creditor to whom section 54 applies that are greater than the payments that creditor would receive if such payments were made on a pari passu basis, the fees, costs and charges referred to in section 60(2)(g) shall be payable by that creditor in proportion to the payments received by him or her.”.

Amendment No. 63 provides for a new subsection to section 61 which sets out how the costs and charges are to be apportioned in a debt settlement arrangement unless the arrangement already makes such provision.

The amendment provides that where an arrangement requires payment to a creditor, the creditors will be those holders of excludable debt, as defined in section 2, who have consented to participate in a debt settlement arrangement which is greater than the creditor would receive on a pari passu basis. The creditor is required to pay the fees, costs and charges to the personal insolvency practitioner who apportioned the payments made by him or her unless the other creditors agree.

Amendment No. 103 provides for a corresponding amendment to section 96 which sets out how the costs and charges are to be apportioned in a personal insolvency arrangement, unless the arrangement already makes such a provision.

Amendment agreed to.
Question proposed: "That section 61, as amended, stand part of the Bill."

I ask the Minister if a loan of €30,000 was taken on a 20-year term and one or both of the borrowers become unemployed, how will the outstanding balance, which could be anything from €25,000 to €30,000, be paid? Will the borrowers be covered by this section?

This section deals with debt settlement arrangements and the terms of a proposal for a debt settlement arrangement. Debt settlement arrangements are applied to unsecured debt without any particular limits being set. To take a simple example, if somebody has a debt of €30,000 that is not secured - let us assume it is not a mortgage - it can be dealt with pursuant to the debt settlement arrangement. However, if two people are unemployed, the debt settlement arrangement envisages that they will over a period of time have a financial capacity to discharge their debts, make payments towards discharging the debt or, if the creditors are agreeable, apply an amount of money at a lesser level to pay off the debt over the period of years provided for in the debt settlement arrangement.

If two people suddenly become unemployed the question arises of what other financial resources they possess and how they propose to deal with the debt. Does the personal insolvency practitioner present to creditors a scheme which would facilitate, over a period of years, that debt being discharged? To take it at its simplest, if an individual with no assets, income or resources owed €30,000, a debt settlement arrangement clearly could not be entered into because no arrangement could be made with creditors. The option for that individual would be bankruptcy. If the €30,000 debt was secured on, for example, a family home it would fall into the personal insolvency arrangement category, and the same issue would arise.

If the answer to whether incomes, assets or resources available to facilitate, over a period of time, the debt being discharged is that there is nothing and the proposal is "We have nothing, we are going to pay nothing", the creditor may do nothing at all if he or she believes the borrower has nothing, and the matter may remain as is for a very long time. However, if the creditor sued on the debt and the debt was not paid, he or she would be entitled to put the debtor into bankruptcy. The latter may also petition for bankruptcy to avoid all of that. It is a question of the person's or, in the case of a joint debt, persons' individual circumstances.

Question put and declared carried.
SECTION 62

Amendments Nos. 64, 65, 72, 104 and 105 are related and may be discussed together, by agreement. Is that agreed? Agreed.

Government amendment No. 64:
In page 59, lines 41 to 46 and in page 60, lines 1 to 6, to delete subsection (1) and substitute the following:
“(1) Unless the creditor concerned otherwise agrees in writing and provision is so made in the terms of the Debt Settlement Arrangement, a preferential debt shall, subject to subsection (3), be paid in priority by the debtor and where those debts are to be paid in priority the provisions of section 81 of the Bankruptcy Act 1988 shall apply with all necessary modifications.”.

Amendment No. 64 replaces the existing subsection with revised text to make it clear that unless the creditor otherwise agrees in writing and provision to that effect is made in the terms of the debt settlement arrangement, a preferential debt shall, subject to subsection (3), be paid in priority by the debtor and where those debts are to be paid in priority the provisions of section 81 of the Bankruptcy Act 1988 shall apply with all necessary modifications.

Amendment No. 65 proposes the insertion of an interpretation provision in regard to preferential debt, as referred to in this Chapter of the Bill. Amendment No. 72 deletes subsections (3), (4) and (5) of section 68 and substitutes them with a new subsection (2). The provisions at the previous subsection (3) are now being dealt with by the insertion in amendment No. 133 of an express provision regarding the treatment of debts in other currencies. The previous subsection (4) is no longer required because it refers back to the provisions of section 60(2)(c), which was deleted by amendment No. 60. The provisions of previous subsection (5) have been refined to create a new subsection (2).

Amendments Nos. 104 and 105 relate to preferential debt. Amendment No. 104 replaces the existing subsection with revised text to make it clear that unless the creditor concerned otherwise agrees in writing and provision is so made in the terms of the personal insolvency arrangement, a preferential debt shall, subject to subsection (3), be paid in priority by the debtor and where those debts are to be paid in priority the provisions of section 81 of the Bankruptcy Act 1988 shall apply with all necessary modifications. It is my intention to bring forward an amendment on Report Stage to improve the text of the current section 81 of the 1988 Act. Amendment No. 105 proposes to insert an interpretation provision on preferential debt, as referred to in this Chapter of the Bill.

Amendment agreed to.
Government amendment No. 65:
In page 60, between lines 19 and 20, to insert the following subsection:
“(4) In this Chapter, “preferential debt” means a debt which, if the debtor concerned were a bankrupt would be a debt -
(a) that by virtue of section 81 of the Bankruptcy Act 1988 is to be paid in priority to all other debts, or
(b) that by virtue of any other statutory provision is to be included among such debts.”.
Amendment agreed to.
Section 62, as amended, agreed to.
SECTION 63
Government amendment No. 66:
In page 60, subsection (1), line 20, to delete “section,” and substitute “section and section 57,”.

This is a technical drafting amendment. It amends the existing text of section 63 to include a necessary cross-reference to section 57.

Amendment agreed to.
Section 63, as amended, agreed to.
Section 64 agreed to.
SECTION 65

Amendments Nos. 67 to 70, inclusive, and 107 to 109, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.

Government amendment No. 67:
In page 62, lines 1 to 21, to delete subsections (2) to (4) and substitute the following:
“(2) When calling a creditors’ meeting under this section, the personal insolvency practitioner shall do so in accordance with any regulations under section 69 and, in any case, shall -
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and time and place at which, the meeting will be held,
(b) ensure that the notice referred to in paragraph (a) is accompanied by a copy of each of the documents referred to in section 66, and
(c) lodge a copy of the notice referred to in paragraph (a) and the documents referred to in section 66 with the Insolvency Service.
(3) Where a creditors’ meeting referred to in subsection (1) does not take place before the expiry of the protective certificate, the Debt Settlement Arrangement procedure shall be deemed to have come to an end.”.

Amendment No. 67 is a drafting amendment to improve the text. It provides in subsection (3)(b) for more specific reference to the documents required to be given to the creditors under section 66. Subsection (4) is being substituted with new text that makes it clear that where a creditors' meeting does not take place before the expiry of the protective certificate, the debt settlement arrangement procedure shall be deemed to have concluded.

Amendments Nos. 68 to 70 are technical drafting amendments advised by the Parliamentary Counsel to provide for correct referencing consequential to the making of amendment No. 66. Amendment No. 107 is required to ensure consistency of approach between the debt settlement arrangement and personal insolvency arrangement provisions in regard to the calling of creditors' meetings. It also provides that where a creditors' meeting referred to in subsection (1) does not take place before the expiry of the protective certificate, the personal insolvency arrangement procedure shall be deemed to have come to an end. This is not sufficiently clear in the current draft of the Bill.

Amendments Nos. 108 and 109 are technical drafting amendments. They arise as a consequence of amendment No. 107 and update the cross-reference to section 102 to take account of the amendments that have been made to that section.

Amendment agreed to.
Section 65, as amended, agreed to.
SECTION 66
Government amendment No. 68:
In page 62, subsection (1), line 22, to delete “section 65(3)(b)” and substitute “section 65(2)(b)”.
Amendment agreed to.
Government amendment No. 69:
In page 63, subsection (2), line 20, to delete “section 65(3)” and substitute “section 65(2)”.
Amendment agreed to.
Government amendment No. 70:
In page 63, subsection (2)(b), line 27, to delete “section 65(3)” and substitute “section 65(2)”.
Amendment agreed to.
Section 66, as amended, agreed to.
SECTION 67

Amendments Nos. 71 and 112 are related and may be discussed together, by agreement. Is that agreed? Agreed.

Government amendment No. 71:
In page 63, lines 39 to 47, to delete subsection (3) and substitute the following:
“(3) Where the personal insolvency practitioner prepares an amended proposal for a Debt Settlement Arrangement pursuant to subsection (2) he or she shall —
(a) notify the debtor of the date on which, and time and place at which, the adjourned meeting will be held,
(b) at least 7 days before the day of the adjourned meeting, unless all of the creditors agree in writing to receive a shorter period of notice, notify each creditor of the date on which, and time and place at which, the adjourned meeting will be held,
(c) ensure that the notices referred to in paragraph (a) and (b) are accompanied by a copy of the amended proposal, and
(d) lodge a copy of the notice referred to in paragraph (b) and a copy of the amended proposal with the Insolvency Service.”.

Amendment No. 71 proposes to delete section 67(3) and to replace it with new text in order to make the provisions consistent with similar provisions in the Bill, such as those in section 65(2). It also provides that where an amended debt settlement arrangement proposal is prepared, the personal insolvency practitioner should also be required to furnish this proposal to the insolvency service. The purpose of amendment No. 112 is to make a corresponding amendment to section 105(5), which applies to creditors' meetings in regard to personal insolvency arrangements.

Amendment agreed to.
Section 67, as amended, agreed to.
SECTION 68
Government amendment No. 72:
In page 64, lines 31 to 44, to delete subsections (3) to (6) and substitute the following:
“(3) A creditor to whom a preferential debt is owed shall not be entitled to vote in respect of that debt in favour of a proposal for a Debt Settlement Arrangement at a creditors’ meeting unless that creditor has furnished to the personal insolvency practitioner a waiver in writing of the creditor’s right to have that debt treated as a preferential debt.”.
Amendment agreed to.
Amendment No. 73 not moved.
Section 68, as amended, agreed to.
Sections 69 to 76, inclusive, agreed to.
SECTION 77

Amendments Nos. 74 and 119 are related and will be discussed together. Is that agreed? Agreed.

I move amendment No. 74:

In page 70, subsection (1), line 23, after “section.” to insert the following:

“Any variation of a Debt Settlement Arrangement made pursuant to this section arising from an increase in the debtor’s means shall not require the arranging debtor to increase any payment made to creditors in an amount constituting more than 65 per cent of the increase in the debtor’s means.”.

The purpose of this amendment is to ensure the person will keep working as that is the Minister's intention, which we support. Our concern is that with a 52% marginal rate of tax, made up of 41% income tax, 4% PRSI and 7% universal social charge the remainder comes to only 48%, of which the bank gets 24%. When we combine all these liabilities, the person trying to resolve his or her insolvency situation is on a marginal tax rate of 76%. We found that in insolvency cases in Scandinavia, this rate is capped at 65%. We want to ensure the person continues to work and that he or she has some reward greater than a mere 24%. Even the most scarifying headlines in the newspapers do no propose we should take 76% taxes from people, but that is de facto what would happen in this case. The general economic point is that as we want the person to keep working, we should allow him or her at least one third of what he or she earns. It is more an economic amendment than a legal one.

It is very important that individuals in these circumstances are incentivised to work. In practical terms, this means that if they work harder or work overtime or their business is successful that they retain some additional portion of the moneys they earn. The proposal put forward by Senators Crown and Barrett seeks to have any variation of repayments in a debt settlement arrangement or personal insolvency arrangement arising from an increase in the debtors means limited to 65% of that increase. I have no particular difficulty with the sentiments behind these proposals, but I must remain consistent in my overall approach.

These new debt resolution arrangements are, essentially, a matter of negotiation between debtors and creditors mediated by a personal insolvency practitioner. The participants are free to come to whatever repayment options best suit all that can be agreed and fulfilled over the period of the arrangement. I am not sure that such a specific intervention as proposed would be wise in the context of negotiations between debtors and creditors. The setting of a definitive figure could become an upward target in the context of some arrangements. I understand the point the Senator is making, but in the context of both debt settlement and personal insolvency arrangements, it is about an agreement being concluded, based on the individual circumstances of the parties, the debtor and the creditors. If in the context of that arrangement it is anticipated that over the period the arrangements will apply the income of an individual in employment or a self-employed individual will increase, that is clearly to everyone's advantage.

Creditors want people to be incentivised to continue to earn funds that will facilitate debt being discharged. If they can be incentivised to earn additional money, the creditors have the incentive of being paid a little sooner or of getting a greater share of the cake. Clearly, nobody will bother to do that if he or she will not benefit from it. Therefore, there is an advantage in this being something that is factored into a debt settlement or personal insolvency arrangement, without imposing some sort of structured provision which might or might not work, depending on individual circumstances and which could, in some circumstances, be a disincentive to an arrangement. On a practical basis, this amendment would not necessarily be a benefit. In the circumstances, I ask the Senator to consider withdrawing it.

I thank the Minister for his response. If banks listened in to this debate, they might take note that they should not charge 76% rates. I will withdraw the amendment, but perhaps we will come back to the issue on Report Stage.

Amendment, by leave, withdrawn.

I move amendment No. 75:

In page 70, subsection (2), line 29, to delete “may” and substitute “shall”.

In the context of the reply given on amendment No. 52 explaining that the Parliamentary Counsel was under huge pressure dealing with the amendments and that it would look at it again before Report Stage, we are willing to withdraw the amendment.

Amendment, by leave, withdrawn.
Amendment No. 76 not moved.
Government amendment No. 77:
In page 70, subsection (3), to delete lines 31 to 38 and substitute the following:
“(3) When calling a creditors’ meeting to be held under this section, the personal insolvency practitioner shall —
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and the time and place at which, the meeting will be held,
(b) ensure that the notice referred to in paragraph (a) is accompanied by a written proposal for the variation of the Debt Settlement Arrangement, and”.
Amendment agreed to.
Section 77, as amended, agreed to.
SECTION 78
Government amendment No. 78:
In page 71, lines 39 to 45, to delete subsection (3) and substitute the following:
“(3) When calling a creditors’ meeting to be held under this section, the personal insolvency practitioner shall —
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and the time and place at which, the meeting will be held,
and
(b) lodge a copy of the notice referred to in paragraph (a) with the Insolvency Service.”.

The co-ordination here is remarkable, amendment No. 78 to section 78. What are the odds?

This is a technical drafting amendment required to ensure consistency with similar provisions in regard to creditors' meetings at section 65, providing for a 14 day notice to creditors.

Amendment agreed to.
Section 78, as amended, agreed to.
SECTION 79

Amendments Nos. 79 to 86, inclusive, and amendment No. 129 are related and will be discussed together. Is that agreed? Agreed.

I move amendment No. 79:

In page 72, subsection (1)(e), line 39, to delete “3 months” and substitute “6 months”.

I would like the Minister to give his view with regard to changing the period from "3 months" to "6 months".

Amendments Nos. 79 to 82 refer to section 79 and seek to increase the time period where an application by a creditor or personal insolvency practitioner is made to the appropriate court to have a debt settlement arrangement terminated, where the debtor has been in arrears with payment for a period of not less than "3 months" to a period of "6 months". In the context of the debt settlement arrangement, where without any notification by the debtor to his or her personal insolvency practitioner a six month payment default occurs, that arrangement is unlikely to succeed. It is important to remember that we are seeking to balance the interests of debtors and creditors in the debt resolution process.

I remain unconvinced that the period stipulated in the section should be extended to six months. It is likely that substantial arrears accumulating in the context of moneys owed to a variety of individuals was the reason the arrangement was put in place in the first instance. It would be put in place on the assumption that the debtor was going to meet his or her repayment commitments, as agreed, and would have the capacity to meet them. It would be unfair on creditors to prolong matters unduly from a three-month to a six-month period in circumstances where it had become obvious the arrangement was simply not working. I have expressed the view that a three-month period is adequate in this context. I oppose amendments Nos. 79 to 82, inclusive, on that basis.

Amendments Nos. 83 to 86, inclusive, are to section 80. They seek to increase from six to nine months the period for which the debtor must be in default before a debt settlement arrangement can be deemed to have failed and be in need of being terminated. Amendment No. 129 proposes a corresponding change to personal insolvency arrangements. I am opposed to these amendments. If there has been a default for a six-month period on a debt settlement or personal insolvency arrangement without notification by the debtor to his or her personal insolvency practitioner, it is clear that the arrangement is not likely to succeed. I am not convinced, however, that the default period should be extended to nine months. The periods prescribed in the Bill, as it stands, regarding the question of a default on each of the particular forms of debt settlement where payments have not been made, are more than adequate and appropriate. If they were to be changed, it would be unfair on creditors and might well maintain the fiction that the debt settlement mechanism was working when in reality it was not.

On amendment No. 85 which relates to the five and one-year reviews, it is important that this be-----

I think the Senator is referring to amendment No. 90 which we have not yet reached. That amendment relates to the five-year review.

We must deal with amendment No. 79.

I will come back to the matter.

Amendment, by leave, withdrawn.
Amendments Nos. 80 to 82, inclusive, not moved.
Section 79 agreed to.
Amendments Nos. 83 to 86, inclusive, not moved.
Section 80 agreed to.
Sections 81 to 83, inclusive, agreed to.
SECTION 84

As amendments Nos. 87 and 128 are related, they may be discussed together.

Government amendment No. 87:
In page 74, subsection (1)(b), line 32, to delete "followed" and substitute "complied with".

Amendments Nos. 87 and 128 are technical drafting amendments to ensure consistency in the text and provide for a better reference to the action that may be taken by the court if procedural arrangements are not complied with by the debtor.

Amendment agreed to.
Amendments Nos. 88 and 89 not moved.
Section 84, as amended, agreed to.
SECTION 85

I move amendment No. 90:

In page 75, subsection (1), line 30, to delete "5 years" and substitute "1 year".

This amendment seeks to ensure the Minister would request a review after one year rather than after five, which is a long time. I appreciate that the proposed one-year timeframe might be somewhat short, but I ask the Minister to give the House his view on it. The current wording which provides for a review to be conducted "not later than 5 years" after the commencement of the legislation does not mean a review cannot be undertaken earlier. However, I am sure the Minister will agree that if the current wording is allowed to stand, the review will not be undertaken until the deadline is about to be reached.

The amendment relates to the review process. It would reduce the period of commencement of a review of the operation of a personal insolvency arrangement under the legislation from five years to one. I have examined the issue of the length and scope of the review period and had hoped to be in a position to address it today. However, I intend to introduce an amendment on Report Stage to apply a reduced review period of three years to all of the new insolvency processes under the Bill. I do not think it would be practical or appropriate to review it after just one year of operation. In the light of my intention to reduce the review period to three years, I ask the Senator to consider withdrawing the amendment, as this issue is not of huge importance. It is of assistance to provide that there be a review. It is practical to conduct such a review after seeing how things have been working for three years. In real terms, the personal insolvency practitioner will always be there in the background. If the circumstances of a debtor change, he or she will be able to contact the personal insolvency practitioner. In effect, any arrangement put in place can be reviewed at any time, including after a change of circumstances. That review can result in another meeting of creditors, if necessary. If a personal insolvency arrangement has been entered into by a person who is in employment but he or she is made redundant after two years through no fault of his or her own, it will clearly have an impact on his or her capacity to make payments under an arrangement. This would result in the personal insolvency practitioner being invoked back into the process and some engagement with creditors. It is a good idea that there be a formal review. In effect, it is likely in practical terms that arrangements will be made for a continuous review or engagement if circumstances change or unexpected difficulties arise.

Amendment, by leave, withdrawn.
Section 85 agreed to.
Sections 86 and 87 agreed to.
SECTION 88

As amendments Nos. 91 to 93, inclusive, are related, they may be discussed together.

I move amendment No. 91:

In page 76, subsection (1)(a), line 47, to delete “€3,000,000” and substitute “€1,000,000”.

I do not intend to press amendment No. 92. We will withdraw it when it is reached. Amendments Nos. 91 and 93 make the same basic point on the criteria for a personal insolvency arrangement. The current ceiling of €3 million is too high and the provision in question is possibly also too loose. I note that it is subject to section 88(4) which allows for the ceiling to be waived in writing by the creditors. It is possible that if the limit were to be set at €1 million, it would avoid recklessness in the financial arrangements of those involved in the settlement. That is why we are suggesting the ceiling be lowered to €1 million.

I want to make a brief comment on amendments Nos. 91 and 93 which are being pursued by Senator Trevor Ó Clochartaigh. It is interesting that after the Joint Committee on Justice, Defence and Equality held hearings on this matter, it expressed the view that the €3 million threshold for a personal insolvency arrangement was too low and recommended that it be raised to €10 million. As I said on Second Stage, I was somewhat chastened to read a critical commentary on our report in a newspaper which suggested a threshold of €10 million would be far too high, as it would, in effect, reward moral hazard and irresponsible speculation. The article in question suggested a threshold of €3 million was too high and that it should be closer to the threshold to be applied to people in debt in respect of a family home and perhaps other forms of debt. Given that I raised this issue on Second Stage, I wonder whether the Minister has any comment to make on it. Notwithstanding the recommendation made in the joint committee's report, it seems €3 million is the highest the threshold should be.

Both amendments propose to reduce the indicative limit for the aggregate amount of secured debt that may be proposed in a personal insolvency arrangement, PIA, from €3 million to €1 million. The Senator's proposals may be based on some comment of the troika in this regard. Such comments were based perhaps on an incomplete understanding of the innovative debt resolution proposals contained in the personal insolvency arrangement.

This arrangement essentially provides a rescue approach as opposed to the classic liquidation approach in bankruptcy. This rescue approach is designed not only for whole mortgages but for all types of debt where a security is involved. This will include viable or potentially viable sole trader-type businesses whose continued existence can sustain employment and economic activity.

The limit of €3 million is not the critical element. To a large degree, it is an indicative figure to assist the approach of debtors and creditors in considering their options. We must remember we are providing an alternative option to bankruptcy. Secured creditors can also consent not to apply the €3 million limit, by agreement. This is a useful option to those concerned in trying to put together a workable debt resolution. I suspect that if we reduce the amount as suggested by the Senator, it would not be long before I was faced with a request to increase it to ensure the success of the personal insolvency arrangement.

There is an extraordinary misunderstanding as to what this is about. Debt settlement arrangements can be entered into for unsecured debt up to any level. Therefore, if some individual has unsecured debt of €6 million, €7 million or €8 million, and if there are creditors willing to enter into arrangements, they can enter into arrangements under a debt settlement arrangement. What is a debt settlement arrangement about? It is about putting in place a structure that will facilitate the discharge of debts properly due over an extended period of time to the benefit of the creditor and also to the benefit of the debtor. Why is this the case? If the creditor cannot recoup payment because the debtor is practically insolvent, the alternative is that the debtor goes into bankruptcy and the creditor may recover very little because what the debtor is going to earn in the next five or six years becomes substantially irrelevant. Moreover, as the debtor can extricate themselves from the debt, the creditor may not recover as much as they would otherwise recover under the debt settlement arrangement.

The same applies to a personal insolvency arrangement. Let us say someone has a debt of €3 million to a financial institution. Let us assume €1 million of that is debt relating to property, half of it to the family home and half to the business out of which they trade, and the other €2 million is moneys borrowed from the bank for the purpose of that business, which is now secured nominally on property but, due to the collapse of property values, this may no longer be providing adequate security. What is this arrangement about? As the debtor cannot pay his or her debts, there are two choices. First, the debtor may go into bankruptcy, in which case all of the assets may be sold, including the debtor's family home, and the debtor can be rendered homeless. From the perspective of the financial institution, because it can get no benefit from the possible workings of the debtor in future years, it may not recover as much as it would otherwise recover, although, of course, it might get some benefit during the bankruptcy period.

The second choice is the PIA, whereby there will be a benefit for the debtor who has a reasonable family home that is not in the mansion class. "Mansion" seems to be a trendy word to use this week and people are going to be very disappointed if their homes are not classified as mansions, if what we are reading in the newspapers is true. Some homes that could have been regarded as mansions years ago apparently may not be, for all sorts of reasons. We will not go there. In any case, from the debtor's point of view, the benefit is he or she may retain his or her home. From the creditor's point of view, he or she may enter into an arrangement which may over a period of years result in recouping a greater sum of what is due to him or her.

There is an idea that this is some great concession for wealthy people. What it is, in fact, is the possibility of an arrangement for individuals who are financially bust and who have €3 million of nominally secured debt. Somebody seemed to have an idea these are wealthy people who have €3 million. If one has a debt of €3 million and is financially bust, one is a good deal less wealthy than a debtor whose debt is only €1 million. Why would one exclude the possibility of a structured debt settlement arrangement which may, in fact, result in the debtor over a period of years having to pay off more of the debt, where the benefit to them is they may keep their home? The other option is for the debtor to go into bankruptcy in which they may lose their home but the creditors may recoup less. Of course, at the end of the day, where it is secured debt, if the secured creditors are not happy with the nature of the arrangement that could be entered into, or at least a portion of them are not happy, they will not enter into it.

The Oireachtas committee had it right and, much though it pains me to say it, the troika had it entirely wrong because it did not seem to understand the structure. There is a case to be made that there should be no limit, either for debt settlement arrangements or personal insolvency arrangements. At the end of the day, whether one enters into a structured resolution will depend on whether one can propose, through a personal insolvency practitioner, arrangements which appear common sense and practical to creditors and which, based on one's full financial disclosure, indicate to creditors they may recoup more of the money owing to them by that structure than going into bankruptcy. There is no particular benefit in having any particular financial limit on this at all. Nevertheless, we put in the figure of €3 million in part because there was a concern this might be misunderstood.

For these reasons, I oppose and disagree with the Senator's amendments. I hope the Senator will take in good faith what I am saying. Of course, there is a reality that everyone is forgetting. The strange thing is that in past years and before this legislation comes into force, without individuals going into bankruptcy, debtors and creditors, with the assistance of intermediaries, have on occasion resolved debt issues by entering into settlements without these formal legal structures. When this legislation is enacted, there is nothing to prevent a group of creditors who are owed a very large sum of money by a debtor getting together and, with the assistance of an intermediary or someone representing both sides, entering into a settlement for many millions of euro of debt. To say the personal insolvency structure should only apply to very limited circumstances but individuals who want to co-operate can do so at any particular level just does not make sense.

Before I call Senator Ó Clochartaigh, I welcome to the Visitors Gallery the members of the Trinity College Chapel Choir who sang at the turning on of the Christmas lights on our Christmas tree. They are very welcome and very well done this evening.

I call Senator Ó Clochartaigh on the Bill.

Before the Senator replies, considering that while all of that happiness was taking place we were all captured in here, we might have a two minute rendition. What does the House think? It might lighten the mood from insolvency, people being mired in debt and all of the levels of depression we must focus on until 9 p.m.

Perhaps a few bars of "Money, Money, Money" by ABBA would be pertinent.

I thank the Minister for his overview. We would concur with him and appreciate that the aim of the legislation is that creditors who are owed money will secure as much of that money as possible in the process, and that the process is to try to avoid bankruptcy in as much as it can be avoided. I also note with great happiness that the Minister agrees the troika is not infallible on issues financial. We will note that one for future debates, perhaps even tomorrow or the day after.

The Senator can draw me out further on that one.

We will take on board what the Minister has said in a very comprehensive answer and we will reconsider this before Report Stage. In the interim, we will withdraw both amendments, with leave to reintroduce them on Report Stage if we feel we want to do that.

I thought it ironic Sinn Féin was proposing something which was in line with what the troika had proposed, which was worthy of comment in itself. I also thank the Minister for a very full response. The criticism of the justice committee report, from what the Minister has said, was unwarranted in that it was judged our recommendation to increase the threshold to €10 million was effectively a way of rewarding people for being irresponsible whereas, as the Minister pointed out, that was based on a misunderstanding.

I am interested to hear that in fact the limit of €3 million could have been higher. The recommendation from the groups who made submissions to the Joint Committee on Justice, Defence and Equality was that it should be higher. As the Minister said, people can make arrangements for higher amounts of debt outside of the personal insolvency arrangements.

Creditors can agree in the context of the process to have a resolution that goes beyond the €3 million.

That is helpful.

Amendment agreed to.

Amendment, by leave, withdrawn.
Amendments Nos. 92 and 93 not moved.
Section 88 agreed to.
NEW SECTION
Government amendment No. 94:
In page 78, before section 89, to insert the following new section:
89.—(1) An excludable debt shall be included in a proposal for a Personal Insolvency Arrangement only where the creditor concerned has consented, or is deemed to have consented, in accordance with this section, to the inclusion of that debt in such a proposal.
(2) Where a personal insolvency practitioner proposes to include an excludable debt in a proposal for a Personal Insolvency Arrangement, he or she shall, without delay, notify the creditor concerned of that fact, which notification shall be accompanied by—
(a) such information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed, and
(b) a request in writing that the creditor confirm, in writing, whether or not the creditor consents, for the purposes of this section, to the inclusion of the debt in a Personal Insolvency Arrangement.
(3) A creditor shall comply with a request under subsection (2)(b) within 21 days of receipt of the notification under that subsection.
(4) Where a creditor does not comply with subsection (3), the creditor shall be deemed to have consented to the inclusion of that debt in a proposal for a Personal Insolvency Arrangement.
(5) Where a creditor consents or is deemed to have consented, in accordance with this section, to the inclusion of an excludable debt in a proposal for a Personal Insolvency Arrangement, that creditor shall be entitled to vote at any creditors’ meeting called to consider that proposal.
(6) Where the debtor concerned is the subject of a protective certificate, and a creditor to whom this section applies brings an application under section 93(1) in respect of that protective certificate, the period referred to in subsection (3) shall not commence until the date on which the appropriate court determines the application.
(7) In this Chapter, “permitted debt” means an excludable debt to which subsection (1) applies.”.
Amendment agreed to.
SECTION 89
Government amendment No. 95:
In page 79, between lines 17 and 18, to insert the following subsections:
“(3) An application under this section may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate under section 91.
(4) Where a personal insolvency practitioner becomes aware of any inaccuracy or omission in an application under this section or any document accompanying such an application, he or she shall inform the Insolvency Service of this fact as soon as practicable and the Insolvency Service shall have regard to any information provided under this subsection for the purposes of its consideration of the application.”.
Section 89, as amended, agreed to.
Section 90 agreed to.
NEW SECTION
Government amendment No. 96:
In page 80, before section 91, to insert the following new section:
91.—(1) Where the Insolvency Service, following its consideration under section 90—
(a) is satisfied that an application under section 89 is in order, it shall—
(i) issue a certificate to that effect,
(ii) furnish that certificate together with a copy of the application and supporting documentation to the appropriate court, and
(iii) notify the personal insolvency practitioner to that effect,
and
(b) is not so satisfied, it shall notify the personal insolvency practitioner to that effect and request him or her, within 21 days from the date of the notification, to submit a revised application or to confirm that the application has been withdrawn.
(2) Where the appropriate court receives the application for a protective certificate and accompanying documentation pursuant to subsection (1)(a), it shall consider the application and documentation and, subject to subsection (3)—
(a) if satisfied that the eligibility criteria specified in section 88 have been satisfied and the other relevant requirements relating to an application for the issue of a protective certificate have been met, shall issue a protective certificate, and
(b) if not so satisfied, shall refuse to issue a protective certificate.
(3) The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision under subsection (2), may hold a hearing, which hearing shall be on notice to the Insolvency Service and the personal insolvency practitioner concerned.
(4) A hearing referred to in subsection (3), unless the appropriate court considers it appropriate to hold it in public, shall be held otherwise than in public.
(5) Subject to subsections (6) and (7) and section 109(2), a protective certificate shall be in force for a period of 70 days from the date of its issue.
(6) Where a protective certificate has been issued pursuant to subsection (2)(a), the appropriate court may, on application to that court by the personal insolvency practitioner, extend the period of the protective certificate by an additional period not exceeding 40 days where—
(a) the debtor and the personal insolvency practitioner satisfy the court that they have acted in good faith and with reasonable expedition, and
(b) the court is satisfied that it is likely that a proposal for a Personal Insolvency Arrangement which is likely—
(i) to be accepted by the creditors, and
(ii) to be successfully completed by the debtor,
will be made if the extension is granted.
(7) Where a protective certificate has been issued pursuant to subsection (2)(a) or extended under subsection (6), the appropriate court may on application to that court extend the period of the protective certificate by a further additional period not exceeding 40 days where—
(a) the personal insolvency practitioner has been appointed in accordance with section 46(7), and
(b) the court is satisfied that the extension is necessary to enable the personal insolvency practitioner so appointed to perform his or her functions under this Chapter.
(8) A hearing held under subsection (7) shall be held with all due expedition.
(9) The period of a protective certificate may be extended under subsection (7) once only.
(10) The registrar of the appropriate court shall notify the Insolvency Service and the personal insolvency practitioner concerned where the court—
(a) issues or extends a protective certificate under this section,
(b) refuses to issue or extend a protective certificate under this section, or
(c) decides to hold a hearing referred to in subsection (3).
(11) Where a protective certificate is issued under this section, the Insolvency Service shall—
(a) enter details of the name and address of the debtor and the date of issue of the protective certificate, and
(b) where applicable, the extension under this section of the protective certificate, together with such other details as may be prescribed under section 128(3)(b), in the Register of Protective Certificates.
(12) On receipt of a notification under subsection (10) of a decision of the court referred to in that subsection, the personal insolvency practitioner shall notify each of the creditors specified in the schedule of creditors of that decision and, in the case of a decision to issue a protective certificate, the notification by the personal insolvency practitioner shall contain a statement—
(a) that the debtor intends to make a proposal for a Personal Insolvency Arrangement,
(b) of the effect of the protective certificate under section 92, and
(c) of the right of the creditor under section 93 to appeal the issue of the protective certificate.
(13) Notwithstanding the provisions of subsections (5), (6) and (7), a protective certificate that is in force on the date on which a proposal for a Personal Insolvency Arrangement is approved in accordance with section 106 shall continue in force until it ceases to have effect in accordance with section 109.
(14) A protective certificate issued under this section shall—
(a) specify—
(i) the name of the debtor who is the subject of it,
(ii) the debts (“specified debts”) which are subject to it, and
(iii) the name of each creditor to whom a specified debt is owed,
and
(b) contain such other information as may be prescribed.
(15) In considering an application under this section the appropriate court shall be entitled to treat a certificate issued by the Insolvency Service under subsection (1) as evidence of the matters certified therein.”.
Amendment agreed to.
Section 91 deleted.
Sections 92 to 94 agreed to.
SECTION 95

Amendments Nos. 97 to 99, inclusive, are related and may be discussed together. Amendment No. 99 is an alternative to amendment No. 98.

Amendment No. 97 not moved.
Government amendment No. 98:
In page 85, subsection (2), lines 28 to 48 and in page 86, lines 1 to 25, to delete paragraphs (c) to (e) and substitute the following:
“(c) where the debtor performs all of his or her obligations specified in a Personal Insolvency Arrangement, he or she shall not stand discharged from the secured debts covered by the Personal Insolvency Arrangement except to the extent provided for under the terms of the Personal Insolvency Arrangement;”.

Government amendment No. 98 has already been discussed with amendment No. 97.

Amendment No. 98 has not been discussed already because amendment No. 97 has not been moved.

Government amendment No. 98 is a technical drafting amendment which arises as a result of the new approach to excluded and excludable debts set out in section 2. In section 95(2), paragraphs (d) and (e) are no longer required and are proposed for deletion. The old paragraph (c) is to be substituted with new text which takes account of the deletion of paragraphs (d) and (e). I will not refer to amendment No. 99 if it is not to be moved.

Amendment agreed to.
Amendment No. 99 not moved.

Amendment No. 100, amendments Nos. 136 to 140, inclusive, and amendment No. 165 are related. Amendment No. 165 is an alternative to amendment No. 136.

I do not intend to move amendment No. 100.

It might be helpful if the Senator were to withdraw the amendment having moved it. This would facilitate an overall discussion on the regulation of PIPs. To be of assistance to Members, I have a briefing note on this matter.

I move amendment No. 100:

In page 87, lines 30 and 31, to delete subsection (3) and substitute the following:

“(3) The Insolvency Service shall publish a code of practice providing guidance on the matters set out in subsection (2), as well as a rule that Personal Insolvency Practitioners will be paid from monies available for distribution to creditors once repayment proposals are accepted.”.

I will deal with amendment No. 100 and in the knowledge that the Senator will withdraw it I will not say anything unkind about it. I will also deal with amendments Nos. 136 to 140, inclusive, and amendment No. 165. The new Part V of the Bill comprising sections 147 to 174, proposed to be inserted by amendments Nos. 136 to 163, make provision for the regulation, supervision and discipline of PIPs. The insolvency service will be responsible for the direct regulation of personal insolvency practitioners. In response to the many representations I have received in this regard I wish to make clear that we will not be imposing any particular restrictions as to the type of profession of persons who will be licensed to perform this function. The practice in other countries is that such insolvency practitioners tend to be accountants or lawyers but can also be other professionals in the broad financial services sectors. Many of these will already be regulated as appropriate by the Central Bank for the provision of other financial services. This is the approach I intend to take. Suitable persons meeting the formal fitness to practise and competence criteria who have indemnity insurance and meet the other requirements of the legislation will be able to apply for registration on an individual, not corporate, basis.

I will now deal with the detail of the new sections proposed to be inserted by amendments Nos. 136 to 140, inclusive. Amendment No. 136 proposes the insertion of section 147, which provides for the interpretation of certain terms used in the new Part 5.

Amendment No. 137 proposes the insertion of section 148. This new section provides that it will be an offence for a person to act as a PIP who is not entitled to do so by virtue of the legislation.

Amendment No. 138 proposes the insertion of section 149, which gives the insolvency service the power to make regulations for the purpose of the control and supervision of personal insolvency practitioners and the protection of debtors and creditors who are or may become parties to debt settlement arrangements or personal insolvency arrangements. These regulations may provide for matters such as procedures governing the authorisation of persons to carry on practice as PIPs, standards to be observed by them, qualifications and requirements as to competence, and information they must provide to the insolvency service. I mention in particular paragraph (f), which provides that the regulations may provide for the circumstances and purposes for which a personal insolvency practitioner may charge fees or costs or seek to recover outlays.

Amendment No. 139 proposes the insertion of section 150, which requires the insolvency service to establish and maintain a register of personal insolvency practitioners that will be published on the website of the insolvency service for the benefit of those who wish to identify individuals qualified to so act.

Amendment No. 140 proposes the insertion of section 151. This section provides that an application for an authorisation to carry on practice as a PIP must be accompanied by certain specified evidence and documents as well as the prescribed fee. Applicants must provide evidence as to their competence, including details of education, training and experience. In particular, applicants must provide evidence of knowledge of relevant Irish insolvency legislation, which will include knowledge of this Bill. Applicants must also furnish a certificate from an accountant certifying that proper financial systems and controls are or will be in place for the protection of moneys received from debtors. They must also provide evidence of their professional indemnity insurance. The insolvency service will make such inquiries and examinations as necessary with regard to an applicant's character, competence and financial position.

In light of the extensive provisions of the new Part 5, as outlined, I ask Senators to consider withdrawing their amendments regarding the regulation of PIPs.

I thank the Minister for making available to the House the briefing script on these detailed amendments. Last Friday at the commencement of Committee Stage there was a request for more information on the rationale for the proposed amendment of the sections, particularly the amendments concerning regulation of PIPs.

On the substance of the amendments, it is welcome that professionals will be able to apply for registration on a case-by-case basis and that categories will not be limited to those who are members of the accountancy profession. I note there will be detailed provision for complaints to be made and sanctions to be imposed.

The only concern about allowing an open system of application for registration is that there would be sufficient accountability in the legislation where there are problems, given the sensitivity of the work to be undertaken by the personal insolvency practitioner. I expect to hear more about those amendments when we come to them. I welcome this general note for Senators on these amendments.

I echo the Senator's comment that we also welcome the note and will take on board what the Minister has said in it and will study it between now and Report Stage. In the interim I will withdraw amendment No. 100.

My concern is that if there were personal insolvency agents, effectively, the work would be a side job or they would double up if it was not their core business. In an ideal world that would possibly be the position but I would prefer if this was the core element of the work of personal insolvency agents. On a general point, I commend the Minister for his extremely comprehensive replies. I have been listening on screen in my office. It would be great if-----

We are on the amendments.

I am aware of that and I have not spoken yet today.

Yes, but we are on amendments.

If Committee Stage of every Bill received the same attention from a Minister we would do well.

Amendment, by leave, withdrawn.
Government amendment No. 101:
In page 87, lines 32 to 39, to delete subsection (4) and substitute the following:
"(4) For the purposes of subsection (2)(g), and without prejudice to subsection (3), in determining whether a debtor would have sufficient income to maintain a reasonable standard of living for the debtor and his or her dependants under the Personal Insolvency Arrangement, regard shall be had to any guidelines issued under section 23.".
Amendment agreed to.
Section 95, as amended, agreed to.
SECTION 96
Government amendment No. 102:
In page 88, subsection (3), line 12, after "Arrangement" to insert ", and subject to section 97,".
Amendment agreed to.
Government amendment No. 103:
In page 88, between lines 15 and 16, to insert the following subsection:
"(4) Unless provision is otherwise made in the Personal Insolvency Arrangement, where an Arrangement provides for payments to a creditor to whom section 89 applies that are greater than the payments that creditor would receive if such payments were made on a pari passu basis, the fees, costs and charges referred to in section 95(2)(h) shall be payable by that creditor in proportion to the payments received by him or her.".
Amendment agreed to.
Section 96, as amended, agreed to.
SECTION 97
Government amendment No. 104:
In page 88, lines 23 to 34, to delete subsection (1) and substitute the following:
"97.-(1) Unless the creditor concerned otherwise agrees in writing and provision is so made in the terms of the Personal Insolvency Arrangement, a preferential debt shall, subject to subsection (3), be paid in priority by the debtor and where those debts are to be paid in priority the provisions of section 81 of the Bankruptcy Act 1988 shall apply with all necessary modifications.".
Amendment agreed to.
Government amendment No. 105:
In page 88, after line 49, to insert the following subsection:
"(5) In this Chapter, "preferential debt" means a debt which, if the debtor concerned were a bankrupt would be a debt-
(a ) that by virtue of section 81 of the Bankruptcy Act 1988 is to be paid in priority to all other debts, or
(b ) that by virtue of any other statutory provision is to be included among such debts.".
Amendment agreed to.
Section 97, as amended, agreed to.
SECTION 98

I move amendment No. 106:

In page 90, between lines 29 and 30, to insert the following subsection:

"(7) The lender will also be obliged to propose a solution to the borrower's problem.".

This amendment is self-explanatory. It refers to the terms which a personal insolvency arrangement must include in relation to the secured debt. As we believe the lender should have made an effort to meet the debtor half way, that is the reason we suggest the amendment.

I know this is a well intended amendment but it is odd for a reason I will come to.

Section 98 sets out a number of detailed requirements primarily in regard to valuation and treatment of the security held by a secured creditor, the personal insolvency arrangement. It is not clear in regard to the provisions of the section, what the Senator's proposal seeks to achieve. Clearly, he wants to encourage, and I agree, creditors to constructively engage. Where the creditors are banks we want them to constructively engage. To oblige someone to propose a solution to the borrower's problem would not work as one person's solution is another person's problem. For example, what would be the Senator's reaction if the secured creditor - let us presume it is a bank - proposed full and immediate payment of the entirety of the loan or, alternatively, repossession of the property? The financial institution might say the debtor has a problem and owes it a large amount of money and ask for the property. As far as the financial institution is concerned that solves the debtor's problem and it also serves the problem of the financial institution.

The provision of the new personal insolvency arrangement is a significant solution to addressing the problems of debt, in particular, where a home mortgage might be concerned. It involves an engagement, the personal insolvency practitioner having got a full disclosure of income, assets, liabilities, resources. The debtor then engages with creditors to find out what is due to them, examines the financial reality and draws up a proposal on behalf of the debtor. The hope is that the creditors will engage. The incentive for creditors to engage is that it involves the prospect of them recouping all or a portion of what is due to them in circumstances where they may not otherwise do so, or if they do it may be somewhat less. The other incentive is that if one does not do the deal and the debtor goes into bankruptcy one may also recover a great deal less. I understand the good intention behind the amendment but I do not think its inclusion in the Bill would add anything. It could create a perception that creditors could simply demand something which they would see as a benefit and which might, from their perspective, solve the debtor's problem, but it may not be a desirable solution from the debtor's perspective.

I appreciate where the Minister is coming from and he is right that it is well intended. Many people are finding it difficult to get the banks to engage constructively in the debt settlement process. The essence of what we are trying to achieve is to encourage the banks to engage more actively. They engage to a certain extent but the solution is not always to the benefit of the person who owes them the money. Perhaps the Minister would take on board the point we are trying to make and look at it again before Report Stage. If he is willing to do that we will withdraw the amendment with leave to bring it back on Report Stage. It is important to send a message to banks because people consider the banks are not engaging properly with them. That is the important message.

I also have to be fair. The financial institutions have responded to people's short-term debt crises. Forbearance arrangements have been in place in the past three or four years of the financial crisis and the collapse of property prices. We know from statistics and information made available, that approximately 80,000 arrangements have been entered into which involve debt forbearance. Where the financial institutions have been slow is in recognising that in certain circumstances debt forbearance is only kicking the can down the road and there is a need for debt forgiveness but that does not apply to everybody.

There are individuals who have the resources to meet their debts but, perhaps, they need an extended period in which to discharge them. However, we have to be conscious that while trying to do what is practical and of assistance to people in debt, we also need financial institutions which are sound and do not have to be further recapitalised, that are lending money to people who want to buy homes and making funds available for business purposes to SMEs and larger businesses to assist in the creation of jobs. There is a balance to be struck.

The financial institutions have engaged in a substantial debt forbearance. I said this in the other House and have said so here already. There are many thousands of people who are in genuine financial difficulties, many through no fault of their own, many who bought properties, residential or investment, at the height of the boom, when the banks were throwing money at them like confetti at a wedding without undertaking due diligence that bore some reality to individual's financial circumstances. There are many people caught in those circumstances. For some of them, there is a need for the banks to engage in some level of debt forgiveness because there is no possibility of them meeting their capital obligations with respect of repayments way into the distant future, particularly given the collapse in property values. It is about a balance. It is good for a headline, although the Senator has not done this, to keep on kicking the financial institutions. We must remember the Irish people have paid to recapitalise them.

We need them to function correctly. We need individuals who can afford to discharge debt to do so and to recognise the numbers who have no capacity to do so and will in the distant future need debt forgiveness.

I appreciate that the Senator's proposal is well intended, but I do not wish to mislead him. The Government cannot produce a provision of this nature because it would be counterproductive. It would not assist in anything. What we hope will be of assistance is the new debt settlement architecture that will be put in place which will require the active engagement of debtors and creditors and we will keep under careful review to ensure there is active engagement. If it turns out that there is not and that it requires further amending legislation, I will not be slow to introduce it.

I take on board what the Minister said. We have come a long way in our analysis of the banking sector in terms of from where we have come and where we are now, but we are trying to acknowledge a David and Goliath scenario where people who might be in difficulty with a mortgage are not in as strong a negotiating position as the bank. The repayments they have entered into with their banks which might be interest only and so on only kick can down the road, as the Minister said. The substantial capital sum still remains to be repaid on properties that were significantly overvalued, but this is not being taken into consideration. A mechanism is needed to address it. People expected that through this legislation we would examine the issue of banks having to take into account their own recklessness in the way they dealt with the market. However, I appreciate this might not be the strongest of amendments. Perhaps I will re-examine the issue and table an amendment on Report Stage to take on board a common perspective we both have on the way the banks have treated individuals who took out loans in recent years.

Amendment agreed to.

Amendment, by leave, withdrawn.
Section 98 agreed to.
Sections 99 to 101, inclusive, agreed to.
SECTION 102
Government amendment No. 107:
In page 95, lines 18 to 38, to delete subsections (2) to (4) and substitute the following:
“(2) When calling a creditors’ meeting under this section, the personal insolvency practitioner shall do so in accordance with any regulations made under section 107 and, in any case, shall—
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and time and place at which, the meeting will be held,
(b) ensure that the notice referred to in paragraph (a) is accompanied by a copy of each of the documents referred to in section 103, and
(c) lodge a copy of the notice referred to in paragraph (a) and the documents referred to in section 103 with the Insolvency Service.
(3) Where a creditors’ meeting referred to in subsection (1) does not take place before the expiry of the protective certificate, the Personal Insolvency Arrangement procedure shall be deemed to have come to an end.".
Amendment agreed to.
Section 102, as amended, agreed to.
SECTION 103
Government amendment No. 108:
In page 95, subsection (1), line 39, to delete "section 102(3)(b)" and substitute "section 102(2)(b)".
Government amendment No. 109:
In page 96, subsection (2), line 37, to delete "section 102(3)" and substitute "section 102(2)".
Amendment agreed to.
Section 103, as amended, agreed to.
SECTION 104

Amendments Nos. 110 and 133 are related and will be discussed together.

Government amendment No. 110:
In page 97, lines 3 to 7, to delete subsection (2).

This is a technical drafting amendment consequent on amendment No. 133 regarding debts in other currencies. Amendment No. 133 proposes to insert a new section in Chapter 6 which sets out how debts in other currencies are to be dealt with in the context of the provisions of the Bill. There are specific references to a foreign currency in section 68(3) and section 104(2). However, I am advised it would be more appropriate to delete these references and to provide for a general currency conversion provision applicable to the three new debt resolution processes instead. That is what amendment No. 133 proposes to do.

SECTION 105

Amendment agreed to.
Section 104, as amended, agreed to.

Amendments Nos. 111 and 113 to 118, inclusive, are related and will be discussed together.

Government amendment No. 111:
In page 97, subsection (2), line 31, after "with" to insert "any".

This is a technical drafting amendment to improve the text. The various amendments from the Senators seek to reduce the voting proportions in respect of all creditors in the subclass of secured and unsecured creditors required to approve a PIA at a creditors' meeting. Amendments Nos. 113 and 114 concern proposals to reduce the overall level of votes required at such a meeting to approve a PIA from 65% to either 50% or 30%. This is a crucial provision with regard to the necessary voting proportions required to approve an arrangement. I consider it unlikely that, in effect, creditors would accept a non-majority vote and agree to be bound by it. Amendments Nos. 115 and 116 propose to alter the proportions of secured creditors required to approve a PIA to below 50%, while amendments Nos. 117 and 118 similarly propose the same proportions of unsecured creditors required to approve a PIA. I am not convinced that the reductions proposed in the amendments represent the best approach and they could inhibit reaching an agreement that would be sustainable over a six-year period under a PIA. I have considered the various proportions and have no better alternative proposal at this point. In the circumstance, I must oppose the amendments.

I seek clarification from the Minister of the percentages. Where a proposal for a PIA is considered as having been approved by a creditors' meeting, section 106(1)(a) refers to "a majority of creditors representing not less than 65 per cent in value of the total of the debtor’s debts...", while section 106(1)(b) refers to "creditors [which I presume are Revenue and the banks] representing more than 50 per cent of the value of the secured debts..." and section 106(1)(c) refers to "creditors representing more than 50 per cent by value of the creditors". What will this mean in practice? The more people in favour of the proposal, the more likely it is that it will go ahead, but then the percentage reduces to 50%. Why are there differences?

At least 50% of the secured and unsecured creditors must agree and this is based on a weighted value of the amount owed, which gets us to the figure of 65%.

SECTION 106

Amendment agreed to.
Government amendment No. 112:
In page 97, lines 46 to 48 and in page 98, lines 1 to 6, to delete subsection (5) and substitute the following:
“(5) Where the personal insolvency practitioner prepares an amended proposal for a Personal Insolvency Arrangement pursuant to subsection (4) he or she shall—
(a) notify the debtor of the date on which, and time and place at which, the adjourned meeting will be held,
(b) at least 7 days before the day of the adjourned meeting, unless all of the creditors agree in writing to receive a shorter period of notice, notify each creditor of the date on which, and time and place at which, the adjourned meeting will be held,
(c) ensure that the notices referred to in paragraphs (a) and (b) are accompanied by a copy of the amended proposal, and
(d) lodge a copy of the notice referred to in paragraph (b) and a copy of the amended proposal with the Insolvency Service.”.
Amendment agreed to.
Section 105, as amended, agreed to.

I move amendment No. 113:

In page 98, subsection (1)(a), lines 14 and 15, to delete "65 per cent" and substitute "30 per cent".

Amendments Nos. 113, 115 and 117 seek to reduce the respective percentages from 65% to 30% and 50% to 25%. They should be inserted.

I have explained why I cannot accept the amendments.

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Amendment No. 114 not moved.

I move amendment No. 115:

In page 98, subsection (1)(b), line 18, to delete "50 per cent" and substitute "25 per cent".

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Amendment No. 116 not moved.

I move amendment No. 117:

In page 98, subsection (1)(c), line 24, to delete “50 per cent” and substitute “25 per cent”.

Question, "That the words proposed to be deleted stand," put and declared carried.
Amendment declared lost.

Amendment No. 118 cannot be moved as the words proposed to be deleted now stand as per the previous amendment.

Amendment No. 118 not moved.
Question proposed: "That section 106 stand part of the Bill."

The section provides that 65% of creditors can agree to their treatment in a scheme of arrangements. It has been suggested to me that where a debtor waives his or her qualifying threshold of, say €3 million, that it would require a 100% level of support from secured creditors. It was also suggested to me that a creditor refusing to agree to a personal insolvency agreement suggested by a personal insolvency practitioner could frustrate his or her recovery as well as comprising other creditors who might be willing to enter into some arrangement. Will the Minister advise us on this point? Will this be looked at again between now and Report Stage?

The Senator is correct that in cases where creditors are worth above €3 million, they must agree to go above that threshold. I will have another look at that but it comes back to the issue that we discussed earlier that there was a real case for not having a threshold at all because this is about debt resolution. Accordingly, it is not about letting someone off but about creating a structure which will facilitate more of the debt being discharged over time than would occur if an individual went into bankruptcy and the individual benefiting from the possibility of retaining a modest home in which they are living. I will examine this issue further. However, I am not sure that we can in circumstances where the limit is €3 million force an individual creditor to agree the limit should be waived. This has to be done by mutual consent on all sides. To change that, we would have to bring the limit up further. Otherwise, it would be very arbitrary.

The provisions of this section are quite complex. We are looking at it with the Parliamentary Counsel to see if it might be drafted in plainer language for Report Stage. I do not know if that will be achievable but we will be looking at it.

Question put and agreed to.
Sections 107 to 114, inclusive, agreed to.
SECTION 115
Amendment No. 119 not moved.
Government amendment No. 120:
In page 104, subsection (3), lines 36 to 39, to delete paragraph (a) and substitute the following:
“(a) to make additional payments in excess of 50 per cent of the increase in his or her income available to him or her after the following deductions (where applicable) are made:
(i) income tax;
(ii) social insurance contributions;
(iii) payments made by him or her in respect of excluded debts;
(iv) payments made by him or her in respect of excludable debts that are
not permitted debts;
(v) such other levies and charges on income as may be prescribed,
and”.
Amendment agreed to.

Amendments Nos. 121 to 126, inclusive, are related. Amendment No. 122 is an alternative to amendment No. 121. Amendment No. 124 is an alternative to amendment No. 123. Amendment No. 126 is an alternative to amendment No. 125. These will be discussed together.

I move amendment No. 121:

In page 104, subsection (4)(a), lines 49 and 50, to delete “65 per cent” and substitute “30 per cent”.

These amendments refer to the creditors voting in favour of a personal insolvency arrangement and the percentage of the secured debt required.

These amendments replicate amendments Nos. 113 to 118, inclusive, which we discussed earlier, with regard to drastically altering the proportions of creditors required to vote to accept a personal insolvency arrangement. For the reasons previously given, I cannot accept the Senator's amendments.

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Amendment No. 122 not moved.

I move amendment No. 123:

In page 105, subsection (4)(b), line 3, to delete “50 per cent” and substitute “25 per cent”.

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Amendment No. 124 not moved.

I move amendment No. 125:

In page 105, subsection (4)(c), line 7, to delete “50 per cent” and substitute “25 per cent”.

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Amendments Nos. 126 and 127 not moved.
Section 115, as amended, agreed to.
SECTION 116
Government amendment No. 128:
In page 106, subsection (1)(b), line 11, to delete “followed” and substitute “complied with”.
Amendment agreed to.
Section 116, as amended, agreed to.
Section 117 agreed to.
SECTION 118

I move amendment No. 129:

In page 108, subsection (1), line 2, to delete “6 months” and substitute “9 months”.

Question, "That the figure and words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
Section 118 agreed to.
Sections 119 to 124, inclusive, agreed to.
SECTION 125

I move amendment No. 130:

In page 110, subsection (1), line 42, to delete “€1,000” and substitute the following:

“€650 in the case of a Debt Relief Notice and Debt Settlement Arrangement, or €1,000 in the case of a Personal Insolvency Arrangement”.

This amendment refers to section 125(1) and the threshold whereby a specified debtor under a debt relief notice, debt settlement arrangement or a personal insolvency arrangement secures credit without informing the person from whom the credit is obtained. We believe the threshold should be lowered from €1,000 to €650.

I largely agree with the thrust of the proposal. The amount of €650 in regard to a debtor seeking to obtain credit without informing the other person of his or her participation in a debt resolution process under the Bill should be standardised.

The amount is already provided for in section 33 in respect of debt relief notices and in section 76 in respect of debt settlement arrangements and does not need amendment. I will bring forward an amendment on Report Stage to reduce the amount from the current level of €1,000 in personal insolvency arrangements to €650. I hope Senators will accept this clarification and withdraw the amendment.

We welcome the Minister's commitment to change the wording and bring forward an amendment on Report Stage. I take him at his word and we will withdraw it, with leave to reintroduce it if we do not see the amendment on Report Stage.

Amendment, by leave, withdrawn.
Section 125 agreed to.
Sections 126 to 129, inclusive, agreed to.
SECTION 130

I move amendment No. 131:

In page 113, line 27, after “creditor,” to insert the following:

“and where the consent of both the creditor and debtor has been secured,”.

We believe the section, as it stands, holds that in circumstances where two people have debts and are in credit to one another, the debt or credit is the difference when they are matched off. We are keen to provide that the parties must agree for that to be the case.

I am advised that the proposal from the Senator is not necessary and would not add to the comprehension of section 130, which deals with the set-off of assets and debts between a debtor and creditor. Any balance would then likely be the subject of a debt resolution process as provided for in the Bill. The issue of consent as such does not arise in this particular context and, in the circumstances, I am opposed to the amendment.

Amendment agreed to.

Amendment, by leave, withdrawn.
Government amendment No. 132:
In page 113, between lines 30 and 31, to insert the following subsection:
“(2) Notwithstanding any provision of the Credit Union Act 1997, savings (within the meaning of that Act) of a debtor in a credit union shall be subject to set off in accordance with subsection (1) against a debt owed by the debtor to the credit union.”.
Section 130, as amended, agreed to.
Sections 131 to 133, inclusive, agreed to.
NEW SECTIONS
Government amendment No. 133:
In page 115, before section 134, but in Part 3, to insert the following new section:
134.—(1) For the purposes of Chapter 1, where the amount of a debt owed to a creditor is owed in a currency other than the currency of the State, the amount of the debt shall be converted into the currency of the State at the rate published by the Central Bank of Ireland or the European Central Bank on the application date within the meaning of section 23.
(2) For the purposes of Chapters 3 and 4, where the amount of a debt owed to a creditor is owed in a currency other than the currency of the State, the amount of the debt shall be converted into the currency of the State at the rate published by the Central Bank of Ireland or the European Central Bank on the date of the issue of the protective certificate under the Chapter concerned.”.
Amendment agreed to.

Amendment No. 134 has already been discussed with amendment No. 4. It proposes the insertion of a new section. Is the amendment being pressed?

I recall this amendment was discussed with amendment No. 4 last Friday. The Minister was to consider banning people from trades and professions. He referred to an example of a barrister who remains a rather good barrister but he happened to make the wrong investments. We were awaiting a change on Report Stage and on that understanding I will withdraw the amendment. I understand this is something the Minister is considering for the next Stage.

Amendment No. 134 not moved.
Sections 134 to 145, inclusive, agreed to
SECTION 146

I move amendment No. 135:

In page 120, to delete lines 34 to 38 and substitute the following:

“terminate with immediate effect after the bankrupt has been discharged from bankruptcy.”.

This is a legal point but I am not a person of legal training. However, I offer the amendment in case it is of value to the Minister. I refer it to him for his consideration.

This comes to the nub of the legislation, which is about bankruptcy and the reduction in the term. Like Senator Barrett, I am not a legal person but I imagine our esteemed legal colleague, the Minister, will clarify the position in respect of the amendment, which proposes to delete lines 34 to 38 on page 120. Section 146(85D)(3) states: "An order made under subsection (1) shall not require a bankrupt to make payments for a period of more than 5 years, but nothing in subsection (2) shall prevent a bankruptcy payment order having effect after the bankrupt has been discharged from bankruptcy." In other words, it seems as if the person in question is not bankrupt at all and that the unfortunate bankrupt may believe he or she will get out from under it after five years, but, in fact, it could continue for a considerable period. This may be the thinking behind the amendment, which would discharge the bankrupt with immediate effect. In other words, it appears to be a proposal for a clean, definitive end to it. I would be grateful to hear the Minister's response.

Amendment No. 135 would seek to have the proposed bankruptcy payment order terminated with immediate effect once the bankrupt is discharged. The Bill significantly reforms the provisions with regard to automatic discharge of bankruptcy by reducing the period from 12 years to three years. With the likely increase in persons in bankruptcy from the current level of approximately 30 persons per year to a number likely to be in the low thousands, it is likely that persons adjudicated bankrupt may be in employment. In this regard a bankruptcy payment order to repay some of the debt is appropriate. However, we have no wish to impact on the incentive to retain or seek employment on the part of a debtor or have creditors seek to unduly penalise debtors in the timing of the application for orders. I have given this matter some further thought and I am unsure whether it is possible to link the order directly to the discharge in the fashion suggested in the amendment. However, I am in agreement with the thrust of the amendment.

I propose to bring forward an amendment on Report Stage limiting the effect of a bankruptcy payment order to three years in total. Such a period may be required to be made cumulative over a certain defined period to take account of any variations that may be ordered by the court with regard to the resources available to the debtor. I intend to discuss the matter further with the Parliamentary Counsel and hope we will be in a position to come back to the House on Report Stage. On this basis, I invite the Senator to consider withdrawing the amendment and we will return to this issue.

I do not wish Senator Barrett to withdraw anything for the moment. I wish to further explore the matter.

I do not wish to pre-empt the Senator.

I understood the Senator was planning to withdraw the amendment.

I am unsure. He may not be doing it at all. It is simply that I have several other questions relating to this and I was afraid that it might be withdrawn and that would terminate the discussion.

In deciding to make the change from 12 years to three years, why have we not come into line with the United Kingdom? I put the question because the dogs in the street know that there has been a succession of high profile and not so high profile people who have travelled across the Irish Sea, established their bona fides under United Kingdom law and been discharged as bankrupts after one year. I do not intend to name them because we all know who they are. For the life of me, I do not understand it, given the close nature of jurisprudence between Britain and Ireland. We share a common law system and many other areas of the law. I am baffled by the solution of the drafters of the legislation. Clearly, the Minister has given his imprimatur to it. Why did he not go the whole hog and simply go with one year?

There is a culture in the United States that is something of a cliché at this stage. The idea is that one needs to have been made bankrupt at least twice or three times and one needs to have failed in one's businesses on several occasions before reaching the age of 30 years and then one becomes a multimillionaire and creates a business that will expand to the point where there is vast employment. In other words, business failure is not seen as failure in the American entrepreneurial business culture. Whereas here, despite what has happened in recent years, this is not the case. I have much sympathy for anyone who ends up in the bankruptcy courts, but I realise it is not popular to single out those who made a great deal of money from being creative during the Celtic tiger years. However when one boils it down, these people took a risk. One can question their motives until the cows come home but they are people who took a risk.

They were part of the entrepreneurial class or they joined it because they felt they had something creative to offer and whether it was for their own gain is irrelevant to this particular argument. This country and economy needs people who are prepared to take a risk, to put their money where their mouth is and to go the extra mile. If it means they have ended up becoming hugely successful, financially, surely the benefits of it to the wider economy outweigh any issues of morality that people might have. Some have stood on the high moral ground on many occasions in casting judgment on such people. I know I am walking an extremely thin line here because I share the anger of the general public about the fact that there are people who have patently contributed to the economic disaster that has befallen this country who have yet to answer for their actions but who will, I hope, come before the courts in the fullness of time.

I wished to elaborate on the context in which I am raising this issue and I am sorry if I have spoken for too long on the matter. Essentially, it boils down to the question as to why there is a difference between the English and Irish laws on bankruptcy and why this difference will continue. The people who have been declared bankrupt in the UK will be back in business within 12 months and the chances are that some of them will resurrect their careers, generate money and, by extension, generate jobs. However, the jobs and the money will be in the British economy, not in the Irish one. That is why I am curious about this issue.

I welcome the Minister's remarks regarding revisiting the proposed amendment on Report Stage but is he saying that much of what is in the proposal relating to the amendment has not been clear enough? The Minister seems to be suggesting that he will bring a degree of clarity to the legislation in order that when somebody is declared as being discharged as a bankrupt, he or she will be effectively discharged.

I thank the Minister and will relay his comments to Senator Crown on his return from the United States, where he is possibly imbibing some of that entrepreneurial spirit to which Senator Mooney referred.

I congratulate my colleagues on bringing forward this amendment and thank the Minister for taking the proposal on board. As has been pointed out, there are many people going to the United Kingdom in what has been referred to as bankruptcy tourism. I am aware that there are moves afoot in England to extend the term and perhaps that is what is motivating the Minister in that regard. It does not seem fair or equitable that those who can afford bankruptcy tourism can avail of it in England and those who cannot afford it are stuck with a system which, unless we change it along the lines suggested by Senators Crown and Barrett, could see them kept in a state of limbo by the banks for a lot longer than the three years being proposed.

This debate is interesting and the contributions are following on from what was discussed on Second Stage. It all relates to the question of the responsibility of the debtor, in so far as possible, to pay his or her debts and the responsibility of creditors, the State and its agencies to be fair. Perhaps we should not be asking whether we should be chasing after the bankruptcy laws of the United Kingdom but how fair and appropriate those laws are. For every person who enters bankruptcy and has his or her financial position regulated or resolved, there is still a legacy of people who are owed money and in some cases, substantial amounts of money. Many of those people are in financial distress themselves. We must try to balance justice with responsibility. We must provide people with some degree of hope regarding the future and their ability to return to the economic sphere.

During previous discussions on bankruptcy in this House, many Senators conceded that the 12-year period was grossly long but suggested that a four or five-year period might be appropriate. A three-year limit is probably at the end of the spectrum in terms of it providing assistance, an opportunity to begin again and hope, while also sending a message about personal responsibility. It would also send a message to creditors who would not necessarily be big banks or financial corporations but would also include sole traders, shopkeepers and so forth. In so far as one can ever get any of these imponderable questions right, a three-year limit is probably as right as we can get it. I am happy with the provision. We cannot dispute the fact that there will be bankruptcy tourism but we must focus on getting our own jurisdiction in order. The Minister's proposals are as fair and balanced as they can be.

Like Senator Bradford, I have found the debate very interesting. There are always two sides to any equation. I appreciate that the Minister is going to look at the issue raised by my colleagues and ask him to clarify whether the slate is wiped clean after three years. I thought that there would be some overhang, as I think was the case with the previous 12 year term, in terms of money owing to the Revenue Commissioners and the cost of the bankruptcy itself. I am taking it that after three years, preferential creditors are not able to pin the bankrupt into a continuing bankruptcy situation and prevent him or her from trading.

The question about the three-year term is an interesting one and I would agree with Senator Bradford on the matter. I have always felt that the 12-year term was far too long. It was a throwback to the days of the law being drawn up by the privileged for the privileged. We are now in a different scenario and in that context, the reduction of the term to three years is welcome. However, we really are in unprecedented times. The level of personal and business debt in Ireland now has never been experienced before and is akin to debt levels in other jurisdictions during the Great Depression of the 1930s. In that context, there might be an argument for allowing people to get back into business. I was struck by the point made by Senator Mooney regarding the exodus of business people to Britain to avail of its one-year bankruptcy term but we must balance that against the needs of creditors. There is a case for a shorter term for a limited time. In the next three to five years we will see quite a number of bankrupts and the sooner those people are able to get out of their current situation and back into business, the better.

Where there are trade creditors involved, many of them have gone bankrupt themselves because of the knock-on effect from the failure of others, particularly in the building sector. The people concerned traded and did their work well but failed, perhaps because they were dependent on too few customers. Once those customers became bankrupt and were unable to discharge the debts to them, they had to close business and in some cases became bankrupt. This is a concern. Everything we have done since 2008 has been far too favourable to the banking fraternity and the banks.

The Senator is going outside the scope of the amendment.

Senator Bradford alluded to situations where people are deprived of their house and property in cases of bankruptcy. It is important to look at the situation carefully and not to be as sympathetic to the banks in such cases as they were far from prudential and most of them were irresponsible in lending. Everybody here has heard stories of how irresponsible the banks were in giving loans to people. We have heard of 100% mortgages and some people got 130%. This is an area that should be examined.

I caution that there are many people in the United Kingdom who are not happy with the bankruptcy tourists coming from this country. Senator Daly is correct in what he said. I too have heard that the UK is considering reviewing the time period for dealing with this. I believe the three-year period is appropriate, but perhaps the Minister should consider reviewing this on Report Stage. Perhaps it should be reviewed after 18 months, if possible.

I am mindful of the legislation in terms of company law, where a company can apply for examinership and go into court and get examinership and have 85% of its debts written down and then return to buoyancy. I can think of a number of examples where this has happened, particularly hotels which got 85% of their debts written down. The majority of people affected by the examinership of such hotels, outside of banks, were milkmen, breadmen and people with small businesses who were self-employed, but there was no comeback for them when the hotels returned to buoyancy.

I would like to see this legislation get it right. I accept the counsel of the Minister as I have no doubt his officials have studied international law to the nth degree to get this right.

I will be brief, as we dealt with the issue of whether it should be a one-year or three-year period on Second Stage. First, the three-year period is chosen because it is the average period in most European Union countries. England is an outlier in that it has a one-year period. Second, we must have a balance in the legislation as between debtors and creditors and must give creditors some reasonable opportunity of recovering some moneys due to them. Third, what we do in this Parliament should not be determined by Westminster. We stopped that in 1922 and must make our own judgment on these things. Fourth, some individuals who clearly have their centre of interest in and are resident in this State have found themselves refused access to the bankruptcy structure in the United Kingdom and Northern Ireland. In that context, we must make our own decisions.

It is annoying to see some individuals go to England and seek to extricate themselves. However, there are other issues. Why would people try to have their circumstances dealt with here? The answer is that Northern Ireland and England do not have the equivalent of our personal insolvency arrangement, which creates the possibility of non-judicial debt settlement for secured debt. That is not available in the United Kingdom. There are a number of reasons. On balance, the Government was of the view that three years should be the timeframe.

When we came into government, the legal position was that somebody could be bankrupt for their lifetime, as the provisions in the context of the period of bankruptcy had not been reformed since colonial times. We reduced the period in the Civil Law (Miscellaneous Provisions) Act 2011 to 12 years and are now reducing it to three years. We want to ensure that the three-year period is a real three-year period and that it cannot be extended beyond that. Hence, I made my previous comments in that regard. In the UK and in Ireland, if someone is fraudulent going into bankruptcy and does not make full and proper disclosure of income or assets, the bankruptcy period in both jurisdictions will be extendable. I do not believe this Parliament should have its substantive law determined by the Westminster Parliament. The majority of people in major financial trouble will not go over to the United Kingdom to have their circumstances dealt with there. They will deal with them under our domestic law. We think we have achieved the appropriate balance in this legislation.

Proposals on bankruptcy will come from the European Union in December. We hope to consider these and that will form part of the work we will do during the Irish Presidency. We will examine those provisions in the context of how there can be more harmony across the European Union in jurisdiction issues dealing with the bankruptcy area. However, the likelihood is that the United Kingdom will not opt into those provisions and the current position will remain as it is there for the foreseeable future.

I thank the Minister for his response and appreciate the fact that he dealt with this issue on Second Stage. However, because we are dealing with this amendment, which flowed from that and because of the Minister's positive response, I applaud him for his initiative and for what he has done with this Bill. What he has said is correct. The provisions as they stood were Dickensian in their effect and this change was long overdue. I fully applaud the Minister in that regard.

I find it hard to put myself in a position where I am somehow seen to be defending a scenario wherein we are beholden to a foreign parliament, but that was not the point I was attempting to make. What I stated as fact - acknowledged by all sides of the House - is that a number of high profile business people at the highest level who owed hundreds of millions of euro found the bankruptcy laws in this country so cumbersome that they felt that they had no choice but to go to the next jurisdiction, where bankruptcy is still for a one-year period. Perhaps the British Parliament will change that, but I do not care about that. The Minister will be aware there is a legal term of "cause and effect". All I was doing was highlighting a scenario where very high profile, successful people - one can argue about the morality of their situation - were motivated not so much by trying to get away from their creditors as Senator Bradford seemed to think I was suggesting, but who, because they were genuinely committed to a business culture, wanted to get back into business as quickly as possible.

It will be instructive to establish in the next few years how, with regard to the number of the people who have gone before the bankruptcy courts with success in the United Kingdom, their careers pan out over the coming years. I am not a betting man, but I suggest the chances are a high proportion of them will prove to be extremely successful in their reborn environment. That was the reason I raised the comparison between Britain and Ireland. What the Minister says is correct. What is most important of all in this debate, going back to the amendment proposed by Senators Barrett and Crown, is that the Minister understands that three years should mean three years. Once this law is enacted, I have no doubt it will help considerably the people who need to avail of it.

I fully understand and empathise with those creditors who have lost out and who if they had got any of the individuals we are talking about up against a wall, would do them harm because of the closure of their own businesses. This is an opportunity for us on this side of the House to cheer on the Bill proposed by Senator Quinn two years ago - which is still in the works - which would protect many of the people about whom Senator Bradford spoke, the subcontractors who have lost out. That legislation is simple, but effective and I plead with the Minister to give some consideration to it around the Cabinet table and to bring it forward, as it would protect sub-contractors from rogue and fly-by-night developers who walk away from their responsibilities.

Progress reported; Committee to sit again.

When is it proposed to sit again?

At 10.30 a.m. tomorrow, Wednesday, 5 December 2012.

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