Brian Hayes (Dublin South West, Fine Gael)

I thank Senator Power for raising this important matter. NAMA has assured me, and has stated publicly on many occasions, that it will pursue all debts to the greatest extent feasible, in order to achieve the best achievable financial return for the State. Where debtors are refusing to co-operate, it has been necessary for NAMA to adopt a number of approaches, depending on the legal advice received in each case. Not all cases are the same, as the Senator is aware. Based on those legal opinions which come before NAMA on the particulars of each case, an individual view is determined as to which approach to follow. This may involve the pursuit of personal guarantees through the courts and in some cases, will require litigation to reverse asset transfers where the original intention appears to have been to place the assets concerned beyond the reach of NAMA.

I do not wish to comment on the position of any individual debtor or any particular existing or proposed legal proceeding. Indeed as the case referred to by the Senator is sub judice, it would not be appropriate for me to comment. However, I would make the following points to address the general issue raised by the Senator. Debtors do not normally inform their creditors in advance of their intention to pursue bankruptcy proceedings, and neither NAMA nor any other institution can prevent a debtor from applying for bankruptcy in Ireland or elsewhere if he or she has a legal right to do so. However, NAMA has advised me that where one of its debtors seeks to pursue bankruptcy proceedings outside of Ireland, and where NAMA does not believe that it is bona fide, it will challenge the court decision in such instances.

The general test applied in most jurisdictions as to whether a person is eligible to petition for bankruptcy in that jurisdiction is where that person's centre of main interests, or COMI, is in that jurisdiction. In England and Wales the threshold to establish COMI is comparatively low. The profile of some of NAMA's substantial debtors is of persons with some business interests in the UK and often there may be a well-established pattern of travelling and staying in the UK in connection with these interests. The frequency and duration of such visits to the UK may have increased substantially over recent years as the Irish property market stalled and the UK market remained reasonably buoyant, particularly in London. Accordingly it has proved possible for certain NAMA debtors to legitimately pass the COMI requirement in the UK and seek to be made bankrupt there.

Where an individual has been made bankrupt in the UK, it is open to NAMA as a creditor to appoint a trustee in bankruptcy. The trustee will generally be an individual from the private sector and a licensed insolvency practitioner. He or she is charged, among other things, with maximising the return to creditors. The trustee has the power to summons the bankrupt to be examined as to his assets and to conduct investigations for hidden assets. NAMA advises me that it has already appointed trustees in bankruptcy who are carrying out such work.

The trustee in bankruptcy has the ability to apply to have the 12 month timeframe extended where there is non-co-operation from the bankrupt, or where there is evidence of assets being hidden. The point NAMA makes there is that people should not automatically assume, when NAMA appoints an individual to pursue debtors in this or indeed other cases, that work is not ongoing. When published, a bankrupt in the UK may be discharged from bankruptcy after a lapse of one year, with a further two years during which he or she is monitored. In Ireland, it currently takes 12 years. As proposed in the draft Bill introduced yesterday by my colleague, the Minister for Justice and Equality, that period will be substantially reduced. The draft personal insolvency Bill provides for automatic discharge after three years in place of the current 12 years. Hence, there is an element of convergence which may make the UK process less attractive to some NAMA debtors in the future.

I assure Senators that the Government is committed to introducing fair and appropriate revisions of bankruptcy laws as soon as possible. In the interim, NAMA assures me it will be using all of the powers available to it, within the existing legal framework, to ensure that developers face up to their responsibilities and maximise the return to the State on loans transferred to it.