James Browne (Wexford, Fianna Fail) | Oireachtas source

Deputy Fitzpatrick's amendment refers to section 102 of the principal Act. Currently, this provision would allow a personal insolvency practitioner to propose that the principal amount outstanding on a mortgage should be reduced by a certain sum if the borrower grants a share of his or her equity in the secure property to the secure creditor. The effect of the Deputy's amendment is to specify that the proposal would be made without the agreement of the secure creditor concerned. I appreciate the Deputy's intentions in making this proposal. I recognise that the potential scope of a debt-for-equity proposal under this section, with or without agreement of the secure creditor concerned, has been the subject of several High Court judgments, including most recently in the Fennell and Kirwan cases. I am not, however, in a position to agree to this amendment and I will explain why.

The proposal to impose a debt-for-equity solution on a secure creditor without its consent raises potential legal issues and potentially constitutional issues and would require careful consideration and detailed legal advice. Imposing debt solutions on secure creditors enters into a very difficult legal territory as there is a risk of impinging on the constitutional rights of those creditors. The personal insolvency legislation and previous amending Bills have been very carefully designed and balanced to take full account of these concerns. To make the change the Deputy proposes could disturb this careful balance and risk opening up the Bill to legal challenges. Above all, the legal uncertainty likely to result from such challenges would be extremely damaging to the situation of homeowners in serious mortgage arrears who are in urgent need of solutions. I know the nature and scope of potential debt-for-equity solutions was raised in stakeholder submissions due to the statutory review of the Personal Insolvency Acts. This issue is receiving detailed consideration in that context. The review, as I mentioned in my introduction, is due to report this summer and the Government legislative programme already includes a further amending Bill consequent on its findings. The general scheme of that Bill will be prepared later this year.

I thank Deputy Fitzpatrick for tabling the amendment. It is a very important amendment and speaks to a very important issue that needs detailed consideration. It will be given detailed consideration under the review, and we have a broader and larger insolvency scheme coming later in the year. I have asked the Department to engage with Deputy Fitzpatrick on his very important proposals and to see if they can be accommodated. When this original legislation was brought forward, it was very radical and very badly needed. Willie Penrose was instrumental and critical in that respect. Some limitations may have been put on it, in that the Government at the time would perhaps have preferred it to have gone a little further, but there were fears about the constitutional rights to property. It has proven to be very robust legislation. We are now probably somewhat more confident about that legislation. Where amendments can be made and the protections expanded, that should be done but, as I said, within the context of the review and a broader discussion and assessment. Those are my comments for Deputy Fitzpatrick. I ask him not to push the amendment at this stage, but the Department will certainly engage with him further.

See this speech in context