Pearse Doherty (Donegal, Sinn Fein)
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299. To ask the Tánaiste and Minister for Justice and Equality the number of times the banks' veto has been successfully challenged through the personal insolvency process; and if he will make a statement on the matter. [9320/18]

Charles Flanagan (Laois, Fine Gael)
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The section 115A court review process, introduced with effect from November 2015, permits a debtor to ask the court to review and assess the reasonableness of a Personal Insolvency Arrangement proposal which has been refused by creditors and which includes mortgage arrears on the debtor’s home. During the section 115A court review, the court considers the reasonableness of the refusal using a balanced range of criteria and has power, if satisfied, to impose the proposed personal insolvency arrangement on the dissenting creditor(s). This court based review effectively removes the so called “Bank Veto”.

Since the introduction of the section 115A court review, 78 cases have been approved by the courts in favour of the debtor.

Currently, there are over 500 cases before the courts.  A significant High Court judgment in early February addressed two key issues that had become a logjam in the process. Namely, technical issues around the application for a court review and a fear from personal insolvency practitioners that creditors might pursue them for costs in a personal capacity.  These issues have now been adequately addressed. The judgment has been positively received by both the Insolvency Service of Ireland and Personal Insolvency Practitioners. Subject to any possible appeal, it is expected the judgment will lead to increased activity in Personal Insolvency Arrangements. 

The High Court has published a number of important detailed judgments on the criteria that will be applied by the courts in section 115A review cases, and the types of mortgage arrears resolutions that may be imposed. Those precedents involved the following issues.

- Separated Spouses - a case involving a separated spouse who restructured her mortgage. The Court rejected a claim by the bank that, before any restructure, the bank needed the co-operation of the other joint borrower.

- Rejection of unsustainable warehousing proposal and approval for negative equity write-off - acase where the mortgage lender wanted to warehouse part of a mortgage. The Court ruled that this could not be done unless there is a reasonable prospect of the couple paying back the warehoused amount. The Court, instead, imposed the Personal Insolvency Arrangement which wrote off most of the negative equity.

- Fixing interest rate for the long term - a case concerning a mortgage rate fixed for 27 years. In assessing if this unfairly prejudiced, the financial institution (a fund rather than a bank), the court held that it was appropriate to compare with market investment returns rather than with the interest rates and terms that are available to a bank which also has to raise capital. The Court decided that the Personal Insolvency Arrangement proposal, including the fixed interest rate, was fair and reasonable in this context and was not unfairly prejudicial.

Under Abhaile, the Government’s national Mortgage Arrears Resolution Service, a borrower may apply for legal aid to the Legal Aid Board to seek a court review under section 115A where their proposed Personal Insolvency Arrangement has been rejected by the creditors.

Pearse Doherty (Donegal, Sinn Fein)
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300. To ask the Tánaiste and Minister for Justice and Equality the reason not all examples of possible solutions such as write-downs and debt for equity are not included on the website of the Insolvency Service of Ireland; and if he will make a statement on the matter. [9321/18]

Charles Flanagan (Laois, Fine Gael)
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Section 102(6) of the Personal Insolvency Act 2012 contains a non-exhaustive list of secured debt treatment that may be included in the terms of a personal insolvency arrangement. This list includes interest only payments for the term of the arrangement, part interest and part capital payments, interest rate reductions, principal reductions and creditor agreement to a reduction in the principal sum in return for a share in the equity of the debtor’s property, also known as, debt for equity.

A number of personal insolvency arrangement scenarios are included on the website of the Insolvency Service of Ireland (ISI) which include examples of both secured and unsecured debt write-downs. These scenarios reflect the range of standard offerings that creditors have agreed with personal insolvency practitioners in successfully concluded arrangements approved by the courts.

The ISI monitors the outcomes of personal insolvency arrangements, in particular they monitor the commercial terms of successful arrangements. Where a new trend emerges, the ISI will add to the scenarios on its website.

I am advised that the ISI is not aware of any creditor whose credit guidelines provide debt for equity as a standard offering to personal insolvency practitioners. However, the ISI is aware of a number of debt for equity solutions that have been proposed by personal insolvency practitioners to cater for the exceptional circumstances of individual debtors. These proposals are currently subject to the section 115A court review process. I understand that the ISI will continue to monitor the progress of these cases and will publish such a scenario on its website if cases are successful.

Pearse Doherty (Donegal, Sinn Fein)
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301. To ask the Tánaiste and Minister for Justice and Equality his plans to reform the insolvency process as per the programme for Government or other means; and if he will make a statement on the matter. [9324/18]

Charles Flanagan (Laois, Fine Gael)
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The Personal Insolvency Act 2012 has modernised the regime for personal insolvency and brought Ireland in line with international best practice by providing for a range of debt resolution options within a statutory framework which balances the rights of creditors and debtors. The Personal Insolvency Arrangement, in particular, is an innovative solution that seeks to restructure or settle secured debt. Other important elements of this framework include the statutory protections regarding the debtor's reasonable living expenses and their home.

Since its establishment in 2013, the Insolvency Service of Ireland (ISI) has returned over 6,000 debtors to solvency with over 2,000 of those cases being Personal Insolvency Arrangements (PIAs) which deal with mortgage debt. In over 90% of these PIA cases, debtors have been able to stay in their homes. This is a significant achievement given that many cases involved arrears exceeding 720 days.

In addition, the solutions introduced in the Personal Insolvency Act 2012 have served as a catalyst for over 120,000 informal agreements between debtors and creditors, as reported by the Central Bank of Ireland. Debtors now have realistic alternative options available to them through the ISI if negotiations break down.

The Government has introduced a number of amendments and supports, since 2012, to ensure the success of the solutions provided by the personal insolvency legislation. These include the section 115A court review process and the Abhaile Mortgage Arrears Resolution Service.

The section 115A court review process permits a debtor to ask the Court to review and assess the reasonableness of a rejected PIA and, where satisfied as to its reasonableness, make an order confirming the PIA proposal.  This removes the so-called “Bank Veto”.

Another important enhancement is Abhaile, the Government’s national Mortgage Arrears Resolution Service. This was introduced in 2016 to ensure that people who are in danger of losing their home have access to free professional advice, including advice from a personal insolvency practitioner. In addition to detailed financial advice, Abhaile offers legal advice to homeowners in mortgage arrears with the aim of allowing them to find a solution to their arrears and to stay in their homes where possible.

Since 2016, the Abhaile Scheme has engaged with over 10,000 people in mortgage arrears, most of them in the chronic arrears category over 360 or 720 days in arrears. Up to 19 February 2018, Abhaile has provided: 

- financial advice and negotiation help – through Dedicated Mortgage Advisers working with MABS – to over 4,900 borrower households in home mortgage arrears;

- vouchers for professional financial advice and help on home mortgage arrears from a Personal Insolvency Practitioner, to 8,292 borrowers;

- vouchers for legal advice on home mortgage arrears from a Legal Aid Board solicitor, to 2,285 borrowers;

- help from a duty solicitor for unrepresented borrowers before a County Registrar’s court on home repossession, to over 3,340 borrowers.

My Department is also finalising a review of the operation of the Personal Insolvency Acts. The review is taking place under section 141 of the Personal Insolvency Act 2012, which requires the Minister for Justice and Equality (in consultation with the Minister for Finance) to review the operation of Part 3 of the 2012 Act, and responds to a commitment in the Programme for a Partnership Government.

Submissions made by stakeholders via a public consultation on the operation of Part Three of the Personal Insolvency Act 2012 contain a range of recommendations to enhance the process and to support increased engagement with the personal insolvency system. These submissions are being analysed and considered by my Department as part of the review along with recent developments in personal insolvency, including recent High Court judgments related to the process. I look forward to bringing proposals to Government in the coming months to address the conclusions of the review.