In­sol­vency ser­vice has ques­tions for banks

The Irish Times - Business - - BUSINESS NEWS - SI­MON CAR­SWELL

The In­sol­vency Ser­vice of Ire­land will meet the State’s banks next month to ask why there has been a sharp in­crease in ob­jec­tions to per­sonal in­sol­vency ar­range­ments in­volv­ing mort­gage debt write-downs.

Lor­can O’Con­nor, the di­rec­tor of the in­sol­vency ser­vice, has called the meet­ings with mort­gage providers as new fig­ures show the num­ber of ar­range­ments – where in­sol­vent in­di­vid­u­als can have debts of up to €3 mil­lion writ­ten down – have fallen by 39 per cent in a three-month pe­riod.

A per­sonal in­sol­vency ar­range­ment al­lows heav­ily bor­rowed debtors to avoid bank­ruptcy and have mort­gage and other se­cured and un­se­cured debt re­struc­tured or writ­ten down over as many as six years. There were 132 per­sonal in­sol­vency ar­range­ments ap­proved be­tween June and Septem­ber com­pared with 218 in the pre­vi­ous three-month pe­riod, ac­cord­ing to the lat­est quar­terly fig­ures.

Court re­view

The ser­vice at­trib­uted the de­cline largely to the 433 per­sonal in­sol­vency cases that are sub­ject to a court re­view known as a sec­tion 115A case where a pro­posed deal or an ob­jec­tion to a deal can be chal­lenged.

“We are meet­ing the banks over the com­ing weeks to tease out what those is­sues were with a view to re­mov­ing any fur­ther log­jam,” said Mr O’Con­nor.He has not ruled out leg­is­la­tion to force banks to en­gage with debtors and their ad­vis­ers.

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