Briefing Note on the Personal Insolvency (Amendment) Bill 2020

The General Scheme of the Personal Insolvency (Amendment) Bill 2020 (“the 2020 Bill”) was published by the Minister for Justice on 5 October 2020.  The stated aim of the 2020 Bill is to reform personal insolvency legislation to increase supports for borrowers whose income has been severely hit by the COVID-19 pandemic.  The 2020 Bill seeks to amend the Personal Insolvency Acts 2012-2015 (“the Acts”) in a number of significant ways.

The General Scheme of the 2020 Bill contained 10 heads of bill. The most relevant heads of bill are set out below:

  • Heads 2 and 3 allow for the advisory meeting between the Debtor and the personal insolvency practitioner to take place via remote communications rather than it having to be a face to face meeting.
  • Head 5 permits the personal insolvency practitioner to delegate certain statutory functions such as chairing creditors’ meetings to an employee of the PIP.
  • Heads 6 and 7 allow for an additional extension of a protective certificate in exceptional circumstances arising from the COVID-19 pandemic.
  • Head 8 proposes to introduce a possible extension to the current deadline for the bringing of a s.115A application. This would allow a Court to grant an extension of time for the bringing of a s.115A application in “exceptional circumstances”.
  • Head 9 removes the limitation that a borrower must have been in arrears on 1 January 2015 in order to be permitted to bring a s.115A application.
  • Head 10 allows for the making of a Statement of Truth (which does not need to be formally sworn or declared) as an alternative to a statutory declaration. This would apply to the preparation of the Prescribed Financial Statement.

The most substantial changes proposed by the General Scheme of the 2020 Bill are Head 8 which would allow for the Court to grant an extension of time for the bringing of a s.115A application and Head 9 which removes the current limitation for the bringing of a s.115A application.

Head 8 is of particular concern as it would potentially permit a Court to allow a s.115A application to be brought notwithstanding the fact that a protective certificate would have lapsed and a creditor may have taken enforcement steps against a Debtor. The bringing of a s.115A application out of time would have the effect of reactivating the protective certificate potentially invalidating any steps taken by a Creditor in the period between the initial lapsing of the PC and the bringing of the s.115A application.

The actual Personal Insolvency (Amendment) Bill 2020 was introduced in the Seanad on 16 December 2020 and contained some important differences from the General Scheme which had been published by the Minister on 5 October 2020.

Section 13 of the 2020 Bill includes the provision set out in Heads 6 and 7 permitting the further extension of a protective certificate for a period of 40 days in exceptional circumstances.

The proposed extension of time for the bringing of a s.115A application set out in Head 8 of the General Scheme has not been included in the Bill and instead section 14 of the Bill seeks to extend the current 14 day time period for the bringing of a s.115A application to a 28 day time limit. However, importantly this extended 28 day time limit would remain unextendible by a Court as is the case with the current 14 day time limit.

Finally, section 14 of the Bill seeks to amend s.115A to remove the limitation set out in s.115A(18) that a Debtor need have been in arrears on their home loan on 1 January 2015 in order to be entitled to bring an application under the section. The 2020 Bill seeks to amend s.115A(18) such that a Debtor will be entitled to bring an application under s.115A if the Debtor:

“(i) is in arrears with his or her payments, or

(ii) having been in arrears with his or her payments, has entered into an alternative. repayment arrangement with the secured creditor concerned”.

The 2020 Bill has completed its First Stage in the Seanad.  If the Bill passes without further substantial amendments it will significantly increase the numbers of Debtors eligible to apply for relief under s.115A of the Acts.  In particular, any borrowers who have fallen into arrears as a result of the COVID-19 pandemic will be entitled to benefit from the Court review procedure set out in s.115A of the Acts.

How we can help?

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Brian Baily, Partner (bbaily@bhsm.ie), or Richard Lee, Partner (rlee@bhsm.ie) for further information.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

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