Alan Shatter (Dublin South, Fine Gael)

We had an extensive discussion on reform of our law on bankruptcy on Second Stage and Committee Stage. It is fair to say my proposals received a positive welcome from most Senators. However, I emphasised these early reforms were in advance of the more comprehensive reform required under the EU-IMF programme of financial support for Ireland. Essentially, I am providing in section 20 for an automatic discharge for the first time of bankruptcies on the 12th anniversary of the adjudication order, with no conditions.

Senator O'Donovan's amendment No. 3 seeks to reduce that automatic discharge period further, from the 12th to the third anniversary. Such a reduction would be premature in advance of more comprehensive reform of bankruptcy law. A reduction of that kind would be unwise without a simultaneous examination of the conditions under which persons are to be discharged from bankruptcy. These conditions are fundamental to the current system and include the following payments of costs, fees and expenses of the bankruptcy and preferential payments. As I advised the House previously, preferential payments cover outstanding moneys due and payable to the Revenue, payable rates and, importantly, moneys that may have payable to former employees.

While I cannot accept the amendment, I am not opposed in principle to a further reduction in the period of time concerning automatic discharge. Work is under way in my Department on more substantial bankruptcy proposals and it is in that context that I envisage a further reduction in the period of automatic discharge.

Amendment No. 4 seeks to further reduce the number of years after which a bankrupt can apply to the court for discharge from bankruptcy from the proposed five years to three years. While I appreciate the reasons for the Senator's amendment, I cannot accept it. The reduction in the application period to the court from the current 12 years to five years for a discharge from bankruptcy, subject to existing conditions including payment of expenses and preferential payments, is a significant advance. We should wait to see how this provision operates in practice before going further. In any event, the application process for discharge is distinct from automatic discharge under current law. For these reasons, I am afraid that I cannot take on board either of the amendments tabled by Senator O'Donovan.