Mr. Lorcan O'Connor:

Deputy Murphy's first question was how a person would know which arrangement was best for him or her and what was the point of no return. In terms of which is the best solution, we have published guides, together with some sample cases, which are on our website and which, hopefully, will help to inform debtors broadly at a high level about what is involved. However, it is the advice he or she will get on a face-to-face basis with the practitioner that will be very specific to his or her circumstances, identifying the options open to him or her and, ultimately, what option in the opinion of the practitioner is in his or her best interest.

Let us say it is recommended to a person that a personal insolvency arrangement is the best way forward. The person always has the option to pull out of that process at any point prior to the establishment of the personal insolvency arrangement, which could be a period of 70 to 100 days. If he or she does so, he or she will not have the option of applying again for a period of 12 months, but beyond that there are no consequences.

The Deputy mentioned that a person entering into one of these arrangements may have pre-existing arrangements with one bank but not with another body. In effect, what these arrangements do is supersede any other arrangement or deal one might have entered into with creditors. Once the practitioner is appointed, the protective certificate is issued, the slate is wiped clean and the practitioner starts again to identify what is in the best interest of the debtor and what is in the best interest of the creditor. If any creditor believes he or she is being unfairly prejudiced, there is the option for him or her to go to court and to make that point to the judge. In terms of that unfair prejudice test, I would see that as being very similar to what exists currently in examinership on the corporate side, under which one looks at what one would get in a liquidation. In this case, what the unfair prejudice test amounts to is what would one get in bankruptcy. In the vast majority of cases, bankruptcy would always be worse for the creditor than what a practitioner might propose. In fact, a practitioner should not propose anything that would not meet that test.

The Deputy mentioned secured debt and the family home. The personal insolvency arrangement itself has very specific protections in regard to the principal private residence to the point that a practitioner is not required to put a proposal together which requires the debtor to sell or move away from the principal private residence unless the running costs of that home are disproportionately large. There is in-built protection in the actual arrangement in regard to the principal private residence.