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

The Deputy's amendment proposes to reduce the requirement that 65% of creditors vote in favour at a creditors' meeting to a value of 50% of voters. This proposal was discussed on Committee Stage and at the time I acknowledged that the question of what is the appropriate level of the qualified majority required to approve a debt settlement arrangement is difficult. As with many provisions in this Bill, a balance must be struck between the rights of debtors and those of creditors. The threshold should not be so high so that creditors representing a relatively small amount of a debtor's overall indebtedness would be in a position to prevent an arrangement from being approved.

A threshold of 50% is proposed by Deputy Collins, and that would reduce protection for creditors' rights in a very significant way. It may not incentivise them to concluding arrangements and may, among other things, have implications for the supply of credit in the economy. Having regard to the features of the debt settlement arrangement process as contained in the Bill, I remain of the view expressed on Committee Stage that the threshold level of 65% is appropriate and will achieve a suitable balance between the rights of debtors and creditors.

It is worth mentioning an issue we discussed on Committee Stage. When the Law Reform Commission examined the issue for the purpose of its report on personal debt management and debt enforcement, which was published in December 2010, the level of qualified majority proposed from the various submissions ranged from between 60% and 75% of creditors in value. The commission ultimately recommended a threshold of 60% and described this as a "relatively low value".

Deputy Donnelly stated he would be happy to adopt certain aspects of the English approach but I am not sure he would be happy to do so in this context. In England, Wales and Northern Ireland, under the comparable individual voluntary arrangement process, which reflects our debt settlement arrangement, a threshold of 75% creditor approval is required. One could argue about whether the level should be 60% or 75% but considering the outcomes in Britain, the higher threshold has not prevented the successful operation of that process in the jurisdictions I mentioned. There were approximately 50,000 individual voluntary arrangements approved in 2011 with the higher threshold of 75%.

Bearing in mind the background of the submissions made to the Law Reform Commission and the need to ensure that creditors are brought on board and we deal with this issue in a way that does not create any risk of constitutional difficulties as well, 65% is a reasonable threshold to prescribe.

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