Jim Walsh (Fianna Fail)

There are two issues involved in this area. The first is the period a person who is declared bankrupt must serve before they can get back into active participation in the economy. I was interested in what Senator Burke had to say on that. I might or might not disagree with him in normal times but we are in unprecedented territory. None of us has seen it in our lifetime and as many Members will be aware, while I was friendly with the former Minister, Dermot Ahern, I was critical of our failure to deal with this and other issues. We are almost three years into the most significant economic crisis we have ever faced. It parallels and is as bad as the Great Depression which, it could be argued, lasted into the 1950s. It lasted for 20 years. I know there was a world war in the middle which makes it difficult to equate, but I suggest we will be lucky to recover from the current crisis in this decade.

If interest rates are increased to a level which will add to the stress of already stressed borrowers, which is very likely, far more people will go to the wall. Many of them may not be pressed into bankruptcy because creditors will realise nothing is to be gained from it. Bankruptcy can be a little like liquidation and receivership whereby the professional classes are the beneficiaries rather than the creditors of the companies. Unless one who is declared bankrupt has a phenomenally complicated asset structure and a very extensive asset portfolio, the normal bankruptcy procedures should be more than adequate to deal with it. If the Minister is of a mind to examine this particular issue, provision could be made whereby in circumstances where such a situation arises which is being dealt with expeditiously, it could be returned to the courts for an extension to deal with the disposal of assets.

It was suggested that we re-examine this in two or three years, which will be six years into the crisis. Not only are people going across the Border, good employers of this country have moved to Britain, the Continent and the United States. They are trying to reconstruct their lives and businesses in these jurisdictions. The crisis may deteriorate further and we will need people like these to generate jobs. I was critical of the five year term that Fianna Fáil proposed as I felt it was far too long. Given the cataclysmic situation we are in, I would have argued for a shorter period than three years but I have been persuaded by my colleague that the three year period would be more prudent. I urge the Minister to examine this matter and be prepared to consider it on Report Stage. I see no good reason for not reducing it to three years particularly given the current situation.

The Bill proposes that one can apply to be discharged on the third anniversary rather than the 12th anniversary. This deals with an amendment we tabled that was ruled out of order which proposed removing the provision made for the payment of expenses, fees and costs of bankruptcy and preferential payments. It was ruled out of order because it could conceivably be a cost to the Exchequer, but let us think about it. This involves somebody who does not have sufficient wealth to discharge his or her liabilities; the amount of assets is less than the amount of liabilities, and one can presume they are significantly less as otherwise the creditors would work through the situation with the person involved. Therefore, I cannot envisage any circumstances - unless the person has won the lottery during the three years - in which he or she would be in a position to meet the costs involved in the bankruptcy, which can be quite high. Many creditors in most receiverships and liquidations complain that it takes far longer than it should. There is an incentive and an inducement to the people involved because the longer it continues, the higher the fees. We need to be careful in this regard.

If we tell people that after three years they are no longer bankrupt but not discharged simply because they have not paid the costs of the bankruptcy and their preferential creditors, the effect of this measure will be null and void and it will not have the desired effect. Why are we reducing it in the first place? It is to recognise the severe situation in which people find themselves. Most people involved come from a business background. They are risk-takers and entrepreneurs but they are also employers and this is the real motivation behind these amendments. Unless we are prepared to give them an avenue to return to their businesses and restart them, we will struggle for a very long time to address the issue of the 440,000 people who are unemployed. I strongly suggest the Minister considers this in a favourable way.

Much of the foundation of the bankruptcy legislation is from a different era and was primarily to ensure people did not act recklessly or fraudulently and to hold them to account if they did so. Nobody would disagree with this but today's climate is very different. We would all accept that most people involved will be those who got into difficulties through making miscalculations based on economic projections supported by international institutions including many of the rating agencies. I urge the Minister to make provision for them in the Bill so they have an incentive to return to business in this country, which is where we need them, rather than have them go abroad where their talents and risk-taking will be of benefit to other countries.