Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I thank the Deputies for tabling these amendments as it gives us an additional opportunity to tease out the Bill. I am afraid I am not willing to accept amendment No. 1 for a number of reasons. It attempts to replace the carefully worded proposal contained in the Bill with a much broader proposal, which seeks to substantially rewrite the relevant provisions of the Personal Insolvency Act 2012. The intention behind section 2 is to provide that a court may, of its own motion or on request, adjourn proceedings to allow a personal insolvency arrangement to be considered where, for example, none had previously been attempted, as with the requirement in bankruptcy petitions. The purpose is to make an appropriate link with the insolvency provisions contained in the 2012 Act. There is no provision, nor could there be such provision, as is suggested in the amendment, that a court should direct that a personal insolvency arrangement be considered.

On a more specific point, the proposed amendment provides that a court shall "instruct a personal insolvency practitioner to make a proposal for a Personal Insolvency Arrangement under the Act of 2012". The court cannot have the role envisaged in the amendment as such a role would run counter to the voluntary nature of the debt resolution process in the personal insolvency legislation. The court has no power of instruction in regard to a voluntary process. A personal insolvency arrangement can only be proposed by a debtor through a personal insolvency practitioner where a debtor meets the eligibility requirements for such an arrangement and there are sufficient funds available to make some payments to ground a proposal. The proposed amendment has no regard for either the context or appropriateness of such a proposal over the debtor's repayment capacity. In any event, the proposed amendment could not have any lawful effect in binding a creditor.

The amendment seems to consider the personal insolvency practitioner is an officer of the court. This is a fundamental misreading of the legislation. The personal insolvency practitioner has no role or standing in an application for repossession. There is no provision in the law to provide for the court to appoint the practitioner as an officer to essentially force a settlement on creditors. I cannot accept the provisions outlined in paragraph (d) of amendment No. 1, which are replicated in amendment No. 7, as they seek to impose a duty on the court with regard to the costs of a personal insolvency arrangement. There is no lawful provision to allow for such, nor could one be imposed. Again, this runs counter to the provisions of the Personal Insolvency Act.

With regard to amendments Nos. 2 and 3 which propose an increase in the two month time limit for the adjournment, as I stated on Second Stage, the Bill includes a provision at section 2(4) which allows the court to consider granting a further adjournment if, by the end of the two month period, it sees real evidence of progress towards a personal insolvency arrangement. I direct the attention of members specifically to the wording of subsection (4) which prescribes the following: "On the expiry of any period of adjournment granted under subsection (2), the court may grant a further adjournment of the proceedings concerned where it considers that significant progress has been made in the preparation of a proposal for a Personal Insolvency Arrangement."

I urge the Deputy to think about that wording for a minute. It refers to the preparation of a proposal. In other words, the personal insolvency practitioner has been engaged with the debtor and would have the expertise to ascertain the eligibility of the debtor. Does the debtor have any income out of which he or she can start making mortgage repayments? The practitioner can look at the overall background financial circumstances and start preparing a proposal. It is not that within two months the bank has to agree. It is not that within two months whatever engagement is required needs to be concluded. It is a two month period to engage with the personal insolvency practitioner who starts the process, effectively, of preparing a proposal for a personal insolvency arrangement. It is a further adjournment simpliciter. I just draw the Deputy's attention to that.

The debtor, if I can put it this way, would have, up to that point, largely ignored all of the available arrangements to try to enter into some form of resolution with a financial institution. The debtor may have ignored the MARP process. The debtor may have known that he or she was in financial difficulties. Let us project ourselves forward to a point when this legislation has been working for some months. The debtor may have ignored the possibility of engaging and just done nothing until proceedings were issued. The court can still adjourn for two months if there is some practical possibility of an arrangement being put in place. It is important to note, however, that if a debtor has not engaged, the court is entitled to exercise discretion and not adjourn. Nonetheless, let us say a debtor comes into court who has not sought to go down the insolvency route and has not engaged with a personal insolvency practitioner. That debtor has incurred substantial arrears and has not resorted to using the legislation. The court can still adjourn and instruct the debtor to consult with a personal insolvency practitioner. The practitioner must then make significant progress in the preparation of a proposal. There is no bank veto on a second adjournment. However, if it is clear at the end of the two months that there is no prospect of preparing a proposal because there is no reasonable proposal that could be presented that would facilitate the workings of a personal insolvency arrangement, clearly there will not be a second adjournment but the opportunity does exist for that to happen.

Effectively, to put it simply, the purpose of the two-month period is to enable the debtor to engage a personal insolvency practitioner with a view to the consideration of an application for a personal insolvency arrangement and, within the personal insolvency arrangement process, to apply for a protective certificate under section 96 of the Personal Insolvency Act. The effect of the protective certificate, which will operate for a period of 70 days, with a possible further extension of 40 days from the date of issue, will be to prevent the creditor, whose debts are covered by the certificate, from initiating proceedings or continuing with proceedings, even where such proceedings were initiated before the application for the protective certificate was made. Again, that is an important issue. What we are doing here is something that never existed in the law in this area in the past. The law was as it was for about 200 years until 2009, when an issue arose out of one court judgment. That judgment is now under appeal to the Supreme Court and none of us knows whether the Supreme Court will uphold the view of the High Court or take a different view. The Supreme Court may hold that, in fact, the law never changed after 2009. We simply do not know what will happen in that regard. What we are doing here is enacting a provision that provides an additional protection for home owners to bring into play when there is an application for repossession of their principle, private residence. We are introducing the possibility for the courts, rather than granting a repossession order, to adjourn the case and instruct the debtor to consult with a personal insolvency practitioner. The personal insolvency practitioner can look at the debtor's overall financial circumstances and consider whether there is a reasonable possibility of making a proposal for a personal insolvency arrangement and obtain a protective order in the courts, which gives the debtor additional protection. If a proposal is prepared or in the process of being prepared, though not necessarily finalised, proceedings to repossess can be adjourned again. This is a really important protection and a very important reform. It is one that I undertook to introduce when we were dealing with this issue in the context of the Personal Insolvency Bill.

In that context, some of the amendments that have been tabled are unnecessary because we have a format here that is workable. When one factors in the protective certificate and the interaction with the insolvency legislation, this provides the protection necessary for anyone who has a reasonable prospect of entering into a personal insolvency arrangement. For all of those reasons, I cannot accept these amendments.