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

These amendments both seek to make substantial changes to the Personal Insolvency Act. As I have stated previously, this is not the intention of the Bill or of section 2, which provides a necessary link to the personal insolvency process.

Amendment No. 9contains an astonishing proposal, in paragraph (c), that the court should consider whether, when a personal insolvency arrangement, PIA, has been rejected by creditors, the mortgagor has been given adequate opportunity to appeal the substantive decision of the mortgagee to reject the proposal. This completely misunderstands the way in which the PIA process works. As I have said many times, it is a voluntary process and where the necessary approval of creditors cannot be obtained on the proposal, the process then ends. There is no appeal to the court in this regard. There exists a possibility that the mortgagor could, through his or her personal insolvency practitioner and where time permits under the protective certificate period, propose a new arrangement which could meet with the approval of creditors. That may be a possibility for some. With regard to amendment No. 14, I repeat that the amendment seeks to rewrite provisions of the Personal Insolvency Act, which is not the purpose of this Bill.

The House should be aware that the protection to a mortgagor proposed by this Bill is to require that the court allow for a personal insolvency arrangement to be considered where, for example, none previously had been attempted, as with the requirement now in bankruptcy petitions, and not that the court should direct a first or a new PIA and effectively determine its outcome. Once a PIA proposal has been rejected by the creditors' meeting and no subsequent proposal is made during the protective certificate period, the personal insolvency practitioner's role ends as a mediator or negotiator for the debtor.

However, members should also remember that where a proposal is rejected at a creditors' meeting and where the protective certificate period still exists, as I said earlier, this does not stop a personal insolvency practitioner making a different proposal that creditors may accept. Therefore, once a proposal has been rejected and where there is no other proposal that can properly be made within the timeframe, the personal insolvency practitioner has no standing whatsoever in the repossession process and the law does not provide for the court to appoint him or her as an officer essentially to force a settlement on creditors. As such, a practitioner cannot do that.

Amendment No. 14ignores the fact that the personal insolvency legislation is designed to allow agreed settlements to be reached as an alternative to court ordered settlements. It is my view this amendment would overturn this carefully calibrated approach. I must add that the Deputy's proposed provision that a PIA proposal should only offer to repay the current value of a property would represent a huge interference in contractual and property rights and would be likely to be subject to swift challenge in the courts. Indeed, it could give rise to constitutional issues. The amendment makes no reference to the repayment capacity of the debtor, which it seems essentially would be determined by the current value of the property. This would have obvious negative consequences for banks, other financial institutions and ultimately for taxpayers.

I believe this amendment could encourage delinquent behaviour on the part of all debtors, nearly 90% of whom are repaying their mortgages, in order to get their mortgages reduced to current value. This would seriously risk a complete collapse of the property market and would threaten the solvency of the financial institutions and indeed the economy. Finally, I consider that this amendment would run the risk of turning every proposal for a PIA into a costly preliminary to repossession. For those reasons, I cannot accept the amendment.

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