The opinions and perceptions of insolvency practitioners in relation to the reform of the bankruptcy act 1988

Abstract

The current economic crisis has had a damaging effect on businesses. Many directors and sole traders have found their debts accumulate to an unmanageable level as a result. Considering the large amounts of money in question these cases will ultimately lead to personal bankruptcy under the Bankruptcy Act 1988. However, this legislation was enacted in a time when very little credit was extended to individuals. Many commentators believe there is a need to reform this legislation. It is criticised for being outdated and irrelevant in this credit society. This thesis explores current bankruptcy legislation in order to find out why there is a need for reform. It discusses the issues surrounding the current legislation, which is largely unused by over indebted individuals. Furthermore, it discovers whether the legislation proposed by the Law Reform Commission provides the solution to these current issues and if not, what provisions would be suitable. As the proposed legislation is more lenient on the debtor, this thesis will also explore whether this will create any issues. The results, based on interviews with eight insolvency practitioners, reveal there is indeed an urgent need to reform this legislation. It is punitive, unfair and restricts bankrupts from re-entering the business community and contributing to the economy. At a time when entrepreneurship is vital in Ireland’s road to recovery, this is a fundamental flaw with the BA 1988. The findings also found that the interviewees believe the proposed law is suitable for the most part but, at times unrealistic and in need of some minor adjustments. The proposed Bill is not expected to be published until 2012 and when this will be enacted is uncertain.