Europe

Irish bankruptcy laws reform proposed by Alan Shatter

Alan Shatter
Image caption The proposals have been published by Irish Justice Minister Alan Shatter

Ireland's justice minister has published proposals aimed at reforming the country's tough bankruptcy laws.

They include reducing the period of bankruptcy to three years from the current 12 years.

The reform of personal insolvency laws is a response to some of the problems thrown up by the country's banking and property crash.

High profile property developers and individual home owners have been saddled with huge, unpayable debts.

In many countries the solution for these people is to declare bankruptcy and then try to make a fresh start.

In the UK, the period of bankruptcy typically lasts for a year, after which former bankrupts can regain their financial freedom.

However the long bankruptcy period in the Republic makes it an unattractive option - in 2010 just 30 people were declared bankrupt.

"Bankruptcy tourism" is also becoming an issue with Irish people declaring bankruptcy in the UK. At least four major property developers have gone down this path.

Ireland's former richest man Sean Quinn also declared bankruptcy in Northern Ireland, a decision which was later overturned by the High Court in Belfast. He was then bankrupted in Dublin.

Making the announcement the Minister Alan Shatter said: "The bill will radically reform our insolvency legislation and, in particular, will assist those in unexpected difficulties as a result of the current fiscal, economic and employment conditions.

"When enacted, this legislation will be one of the key legislative instruments for addressing the financial difficulties of general insolvency, mortgage debt and negative equity."

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