Time and money are two key resources in any successful business. They encompass and conjure up ideas of costs, budgets, productivity, deadlines, profitability investment and so on. The list is endless. The analogy with bankruptcy or rather the legislation dealing with bankruptcy in Ireland springs to mind.
The two principal criticisms of Irish bankruptcy law are that bankruptcy costs too much and it lasts too long. Due to the need for the bankruptcy to be dealt with by the high court, costs of the order of £30,000 are the norm. What creditor can afford that? With no opportunity to examine the estate of the bankrupt in advance, what creditor is going to risk petitioning for a debtor’s bankruptcy with no guarantee that assets realized will cover such huge costs, let alone begin to repay debts?
How long does bankruptcy last in Ireland? Would you believe twelve years – at least? It can actually last a lifetime and even survive the death of the bankrupt. I haven’t been able to ascertain how many dead bankrupts there are in Ireland but surely one is too many.
The European Commission (EC) carried out a review of insolvency law in member states in 2007. Marks were awarded for what the EC deemed to be desirable content such as: short discharge period, streamlined procedures, fair legal treatment of bankrupts, reduced restrictions and so on.
The UK came out on top for legislation and measures already in place scoring five out of ten overall and Austria came out on top for proposed legislation and measures scoring seven out of ten overall.
The following countries scored four points: Belgium, Denmark, Germany, Greece, Italy, Cyprus, Lithuania, Netherlands and Finland. Scoring three points were Spain, France, Poland, Romania and Sweden. Ireland was joined on two points by Estonia and Malta. Scoring only one point were Czech Republic, Latvia, Luxembourg, Hungary, and Slovenia. Scoring zero were Bulgaria, Portugal and Slovakia.
The goal of the EC was to seek ways of overcoming the stigma of business failure and provide bankrupts with a second chance, recognizing that many potentially excellent entrepreneurs could be lost if insolvency legislation was punishment based rather than based on forgiveness.
Would Irish people avail of fairer bankruptcy laws if they were enacted? In one week recently, w/e November 5th 2010 a total of 74 bankruptcy orders were made in Belfast under the UK Bankruptcy legislation, which is among the best in the European Union. This was more than the total number of bankruptcies in Ireland in the last five years.