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

As I have previously stated, 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. In contrast, what amendment No. 3 seeks to do is replace the carefully worded proposal contained in the Bill with a much broader proposal, which would have the effect of rewriting the relevant provisions of the Personal Insolvency Act 2012. There is no provision in the Personal Insolvency Act which would allow a court to direct that a personal insolvency arrangement be considered. A provision of that nature would undermine the voluntary nature of the personal insolvency process.

Under the 2012 Act, 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 does not have regard to 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.

In addition, the amendment seems to consider the personal insolvency practitioner to be an officer of the court, which 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.

The provisions outlined in paragraph (d) of amendment No. 3 seek to impose a duty on the court with regard to the costs of a personal insolvency arrangement. Again, this approach would run counter to the provisions of the Personal Insolvency Act. There is no lawful provision to allow for such an approach, nor could one be imposed.

With regard to amendment No. 5, which proposes an increase in the two month time limit for the adjournment, I remind the House that 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. The wording of subsection (4) is as follows: "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 emphasise that the subsection provides that a court may grant an adjournment, not where a proposal has been agreed but "where it considers that significant progress has been made in the preparation of a proposal". As Deputies will note, the wording refers to the preparation of a proposal for a personal insolvency arrangement, 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. In the two month period of the adjournment, the practitioner may examine the overall background financial circumstances and, where he or she considers that a personal insolvency arrangement is possible, he or she can start preparing a proposal.

As I indicated, the provision does not stipulate that the personal insolvency arrangement has to be agreed with the person's creditors. It is a two month period to engage with the personal insolvency practitioner who effectively starts the process of preparing a proposal for a personal insolvency arrangement. The further adjournment provided for in subsection (4) is not time limited in the manner of the adjournment in subsection (2) but is at the discretion of the court. If it is clear at the end of the two month period that there is no prospect of preparing a proposal because there is no reasonable proposal that could be presented which would facilitate the workings of a personal insolvency arrangement, there will not be a second adjournment. However, the opportunity exists for this to happen.

To put the matter 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. Deputies should be aware that 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, this is an important issue as it provides additional time for matters to be addressed and resolved.

I stress that what is proposed in this section is something that has never existed in the law in this area in the past. What we are doing 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 principal private residence. Rather than providing that the courts may grant a repossession order, as they have done under the legislation that was in place until 2009, we are introducing a possibility for the courts to adjourn the case and instruct the debtor to consult a personal insolvency practitioner. The personal insolvency practitioner can examine the debtor's overall financial circumstances and consider whether there is a reasonable possibility of making a proposal for a personal insolvency arrangement. Moreover, the practitioner can 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, albeit not necessarily finalised, proceedings to repossess can be adjourned again. This is a very important protection and reform and one I undertook to introduce when we were dealing with this issue during our discussions on the Personal Insolvency Bill.

In that context, some of the amendments that have been tabled are unnecessary because we have provided a format that is workable. When one factors in the protective certificate and 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.

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