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Personal Insolvency Bil 2012: From the Seanad (Resumed) (Continued)

Wednesday, 19 December 2012

Dáil Éireann Debate
Vol. 787 No. 4

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(Speaker Continuing)

[Deputy Alan Shatter: Information on Alan Shatter Zoom on Alan Shatter]  Amendment No. 117 removes the requirement for a debtor applying for a personal insolvency arrangement to make a statutory declaration as to his or her co-operation with secured creditors in regard to the principal private residence and replaces it with a requirement for a declaration in writing. At present, section 131 requires the Minister for Justice and Equality to prescribe the form of the prescribed financial statement to be used in applications for the new debt resolution processes provided for in the Bill. For flexibility, amendments No. 177 and 178 propose instead that the insolvency service should carry out this function. Amendment No. 179 is a technical drafting amendment to improve the presentation of section 131.

  Seanad amendment agreed to.

  Seanad amendment No. 57:

  Section 46: In page 44, subsection (2)(c), line 43, after “arrangement,” to insert the following:
“which advice the personal insolvency practitioner shall confirm in writing to the debtor,”.

  Seanad amendment agreed to.

  Seanad amendment No. 58:

  Section 46: In page 45, lines 15 to 39, to delete subsections (4) to (6) and substitute the following:

“(4) On being appointed under subsection (3), the personal insolvency practitioner shall—
(a) confirm in writing to the debtor that the personal insolvency practitioner has consented to act in the role of personal insolvency practitioner as respects the debtor, and

(b) notify the Insolvency Service of his or her appointment.
(5) Where a personal insolvency practitioner is appointed under subsection (3), he or she shall stand appointed, and the debtor concerned shall not appoint another personal insolvency practitioner under that subsection, until such time as—
(a) the debtor concerned requests him or her to resign from the role of personal insolvency practitioner as respects the debtor, or

(b) the personal insolvency practitioner resigns from that role, on his or her own initiative.
(6) Where a personal insolvency practitioner resigns from the role of personal insolvency practitioner as respects a debtor, he or she shall notify the Insolvency Service of that fact, which notification shall be accompanied by a statement of the reasons for his or her resignation.

(7) Where a personal insolvency practitioner appointed under subsection (3) (“original personal insolvency practitioner”)—
(a) dies,

(b) becomes incapable, through ill-health or otherwise, of performing the functions of a personal insolvency practitioner as respects the debtor,

(c) resigns from the role of personal insolvency practitioner as respects the debtor, or

(d) is no longer entitled to perform the functions of a personal insolvency practitioner under this Act,
the debtor shall, as soon as practicable after becoming aware of that fact, appoint another personal insolvency practitioner to act as his or her personal insolvency practitioner for the purposes of Chapter 3 or 4, as the case may be.
(8) (a) Where paragraph (a), (b) or (c) of subsection (7) applies, the debtor concerned shall, as soon as practicable, inform the Insolvency Service of that fact.

(b) Where a personal insolvency practitioner has been appointed under subsection (7)*, the personal insolvency practitioner shall, as soon as practicable, inform the Insolvency Service and the creditors concerned of that fact.”.

  Seanad amendment agreed to.

  Seanad amendment No. 59:

  Section 46: In page 45, subsection (7), line 41, to delete “subsection (5)” and substitute “subsection (7)”.

  Seanad amendment agreed to.

  Seanad amendment No. 60:

  Section 48: In page 46, between lines 20 and 21, to insert the following new section:

48.—(1) Subject to subsection (4), in relation to Debt Settlement Arrangements and Personal Insolvency Arrangements, where a debtor has an interest in or an entitlement under a relevant pension arrangement, such interest or entitlement of the debtor shall not be treated as an asset of the debtor unless subsection (2) applies.

(2) Where this section applies and a debtor has an interest in or entitlement under a relevant pension arrangement which would, if the debtor performed an act or exercised an option, cause that debtor to receive from or at the request of the person administering that relevant pension arrangement—
(a) an income, or

(b) an amount of money other than income, in accordance with the relevant provisions of the Taxes Consolidation Act 1997, that debtor shall be considered as being in receipt of such income or amount of money.
(3) Subsection (2) applies where the debtor—
(a) is entitled at the date of the making of the application for a protective certificate,

(b) was entitled at any time before the date of the making of the application for a protective certificate, or

(c) will become entitled within 6 years and 6 months of the date of the making of the application for a protective certificate in relation to a Debt Settlement Arrangement or within 7 years and 6 months of the date of the making of the application for a protective certificate in relation to a Personal Insolvency Arrangement, to perform the act or exercise the option referred to in subsection (2).
(4) Nothing in subsections (1) to (3) shall remove the obligation of a debtor making an application for a protective certificate to make disclosure of any interest in or entitlement under a relevant pension arrangement in completing the Prescribed Financial Statement.”.

  Seanad amendment agreed to.

  Seanad amendment No. 61:

Section 48: In page 48, between lines 12 and 13, to insert the following new subsection:

“(5) Where the advice of a personal insolvency practitioner under subsection (1) is that the debtor should not make a proposal for, or enter into, an arrangement, the personal insolvency practitioner shall notify the Insolvency Service of that fact, and the appointment of the personal insolvency practitioner under section 46(3) shall come to an end.”.

  Seanad amendment agreed to.

  Seanad amendment No. 62:

Section 48: In page 49, between lines 9 and 10, to insert the following new subsections:
“(4) (a) A Debt Settlement Arrangement shall not contain any terms that would release the debtor from an excluded debt or otherwise affect such a debt.

(b) A proposal for a Debt Settlement Arrangement shall not include any terms that, if contained in a Debt Settlement Arrangement that came into effect, would contravene paragraph (a).
(5) Unless otherwise expressly stated, a reference in this Chapter to a debt is a reference to an unsecured debt and a reference to a creditor is a reference to an unsecured creditor.”.

  Seanad amendment agreed to.

  Seanad amendment No. 63:

Section 53: In page 50, between lines 21 and 22, to insert the following new subsection:

“(3) A debtor shall not be eligible to make a proposal for a Debt Settlement Arrangement where 25 per cent or more of his or her debts (other than excluded debts and secured debts) were incurred during the period of 6 months ending on the date on which an application is made under section 54 for a protective certificate.”.

  Seanad amendment agreed to.

  Seanad amendment No. 64:

Section 54: In page 50, before section 54, to insert the following new section:

54.—(1) An excludable debt shall be included in a proposal for a Debt Settlement Arrangement only where the creditor concerned has consented, or is deemed to have consented, in accordance with this section, to the inclusion of that debt in such a proposal.

(2) Where a personal insolvency practitioner proposes to include an excludable debt in a proposal for a Debt Settlement Arrangement, he or she shall, without delay, notify the creditor concerned of that fact, which notification shall be accompanied by—
(a) such information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed, and

(b) a request in writing that the creditor confirm, in writing, whether or not the creditor consents, for the purposes of this section, to the inclusion of the debt in a Debt Settlement Arrangement.
(3) Subject to subsection (6), a creditor shall comply with a request under subsection (2)(b) within 21 days of receipt of the notification under that subsection.

(4) Where a creditor does not comply with subsection (3), the creditor shall be deemed to have consented to the inclusion of that debt in a proposal for a Debt Settlement Arrangement.

(5) Where a creditor consents or is deemed to have consented, in accordance with this section, to the inclusion of an excludable debt in a proposal for a Debt Settlement Arrangement, that creditor shall be entitled to vote at any creditors’ meeting called to consider that proposal.

(6) Where the debtor concerned is the subject of a protective certificate, and a creditor to whom this section applies brings an application under section 58(1) in respect of that protective certificate, the period referred to in subsection (3) shall not commence until the date on which the appropriate court determines the application.

(7) An excludable debt shall not be the subject of a Debt Settlement Arrangement unless it is a permitted debt.

(8) In this Chapter, “permitted debt” means an excludable debt to which subsection (1) applies.”.

  Seanad amendment agreed to.

  Seanad amendment No. 65:

Section 54: In page 50, subsection (2)(e), to delete lines 39 to 44, subsection (2)(e), and substitute the following:

“(e) a schedule of the creditors of the debtor and the debts concerned, stating in relation to each such creditor—
(i) the amount of each debt due to that creditor,

(ii) whether, as respects the debt concerned, the creditor is a secured creditor and, if so, the nature of the security concerned, and

(iii) such other information as may be prescribed;”.

  Seanad amendment agreed to.

  Seanad amendment No. 66:

Section 54: In page 51, between lines 9 and 10, to insert the following subsections:

“(3) An application under this section may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate under section 56.

(4) Where a personal insolvency practitioner becomes aware of any inaccuracy or omission in an application under this section or any document accompanying such an application, he or she shall inform the Insolvency Service of this fact as soon as practicable and the Insolvency Service shall have regard to any information provided under this subsection for the purposes of its consideration of the application.”.

  Seanad amendment agreed to.

  Seanad amendment No. 67:

Section 56: In page 52, lines 26 to 48, in page 53 lines 1 to 44, and in page 54 lines 1 to 8, section 56 deleted and the following section substituted:

56.—(1) Where the Insolvency Service, following its consideration under section 55—
(a) is satisfied that an application under section 54 is in order, it shall—
(i) issue a certificate to that effect,

(ii) furnish that certificate together with a copy of the application and supporting documentation to the appropriate court, and

(iii) notify the personal insolvency practitioner to that effect, and
(b) is not so satisfied, it shall notify the personal insolvency practitioner to that effect and request him or her, within 21 days from the date of the notification, to submit a revised application or to confirm that the application has been withdrawn.
(2) Where the appropriate court receives the application for a protective certificate and accompanying documentation pursuant to subsection (1)(a), it shall consider the application and documentation and, subject to subsection (3)—
(a) if satisfied that the eligibility criteria specified in section 53 have been satisfied and the other relevant requirements relating to an application for the issue of a protective certificate have been met, shall issue a protective certificate, and

(b) if not so satisfied, shall refuse to issue a protective certificate.
(3) The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision under subsection (2), may hold a hearing, which hearing shall be on notice to the Insolvency Service and the personal insolvency practitioner concerned.

(4) A hearing referred to in subsection (3), unless the appropriate court considers it appropriate to hold it in public, shall be held otherwise than in public.

(5) Subject to subsections (6) and (7) and section 71(2), a protective certificate shall be in force for a period of 70 days from the date of its issue.

(6) Where a protective certificate has been issued pursuant to subsection (2)(a), the appropriate court may, on application to that court by the personal insolvency practitioner, extend the period of the protective certificate by an additional period not exceeding 40 days where—
(a) the debtor and the personal insolvency practitioner satisfy the court that they have acted in good faith and with reasonable expedition, and

(b) the court is satisfied that it is likely that a proposal for a Debt Settlement Arrangement which is likely—
(i) to be accepted by the creditors, and

(ii) to be successfully completed by the debtor, will be made if the extension is granted.
(7) Where a protective certificate has been issued pursuant to subsection (2)(a) or extended under subsection (6), the appropriate court may on application to that court extend the period of the protective certificate by a further additional period not exceeding 40 days where—
(a) the personal insolvency practitioner has been appointed in accordance with section 46(7)*, and

(b) the court is satisfied that the extension is necessary to enable the personal insolvency practitioner so appointed to perform his or her functions under this Chapter.
(8) A hearing held under subsection (7) shall be held with all due expedition.

(9) The period of a protective certificate may be extended under subsection (7) once only.

(10) The registrar of the appropriate court shall notify the Insolvency Service and the personal insolvency practitioner concerned where the court—
(a) issues or extends a protective certificate under this section,

(b) refuses to issue or extend a protective certificate under this section, or

(c) decides to hold a hearing referred to in subsection (3).
(11) Where a protective certificate is issued under this section, the Insolvency Service shall—
(a) enter details of the name and address of the debtor and the date of issue of the protective certificate, and

(b) where applicable, the extension under this section of the protective certificate, together with such other details as may be prescribed under section 128(3)(b), in the Register of Protective Certificates.
(12) On receipt of a notification under subsection (10) of a decision of the court referred to in that subsection, the personal insolvency practitioner shall notify each of the creditors specified in the schedule of creditors of that decision and, in the case of a decision to issue a protective certificate, the notification by the personal insolvency practitioner shall contain a statement—
(a) that the debtor intends to make a proposal for a Debt Settlement Arrangement,

(b) of the effect of the protective certificate under section 57, and

(c) of the right of the creditor under section 58 to appeal the issue of the protective certificate.
(13) Notwithstanding the provisions of subsections (5), (6) and (7), a protective certificate that is in force on the date on which a proposal for a Debt Settlement Arrangement is approved in accordance with section 68 shall continue in force until it ceases to have effect in accordance with section 71.

(14) A protective certificate issued under this section shall—
(a) specify—
(i) the name of the debtor who is the subject of it,

(ii) the debts (“specified debts”) which are subject to it, and

(iii) the name of each creditor to whom a specified debt is owed,

and
(b) contain such other information as may be prescribed.
(15) In considering an application under this section the appropriate court shall be entitled to treat a certificate issued by the Insolvency Service under subsection (1) as evidence of the matters certified therein.”.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Amendments Nos. 68, 69, 71, 82, 92, 93, 123, 124, 126, 127, 146 and 147 are related and will be discussed together by agreement.

  Seanad amendment No. 68:

Section 57: In page 54, lines 9 to 45, to delete subsections (1) to (3) and substitute the following:

“(1) Subject to subsections (3), (4), (5) and (8), a creditor to whom notice of the

issue of a protective certificate has been given shall not, whilst the protective

certificate remains in force, in relation to a specified debt—
(a) initiate any legal proceedings;

(b) take any step to prosecute legal proceedings already initiated;

(c) take any step to secure or recover payment;

(d) execute or enforce a judgment or order of a court or tribunal against the debtor;

(e) take any step to recover goods in the possession or custody of the debtor, unless title to the goods is vested in the creditor or the creditor holds security over the goods;

(f) contact the debtor regarding payment of the specified debt, otherwise than at the request of the debtor;

(g) in relation to an agreement with the debtor, other than a security agreement, by reason only that the debtor is insolvent or that the protective certificate has been issued—
(i) terminate or amend that agreement, or

(ii) claim an accelerated payment under that agreement.
(2) Whilst a protective certificate remains in force, no bankruptcy petition relating

to the debtor—
(a) may be presented by a creditor to whom subsection (1) applies in respect of a specified debt,

(b) in a case where the petition has been presented by such a creditor in respect of a specified debt, may be proceeded with.
(3) Without prejudice to subsections (1) and (2), and subject to section 63, whilst a protective certificate remains in force, no other proceedings and no execution or other legal process in respect of a specified debt may be commenced or continued by a creditor to whom subsection (1) applies against the debtor or his or her property, except with the leave of the court and subject to any order the court may make to stay such proceedings, enforcement or execution for such period as the court deems appropriate pending the outcome of attempts to reach a Debt Settlement Arrangement, but this subsection shall not operate to prohibit the commencement or continuation of any criminal proceedings against the debtor.”.

Deputy Alan Shatter: Information on Alan Shatter Zoom on Alan Shatter These amendments seek to improve the provisions of the Bill relating to the effect of a protective certificate or the approval of a debt settlement arrangement or a personal insolvency arrangement. Amendments Nos. 68 and 123 refine the text of sections 57 and 92 to better clarify the effect of the issue of a protective certificate in a debt settlement arrangement or a personal insolvency arrangement.

Amendment No. 69 makes it clear that a secured debt is not affected by a protective certificate in the debt settlement arrangement process. Amendment No. 71 is required to improve the current formulation of section 59(1). It also includes a new provision which requires the personal insolvency practitioner to make a proposal for a debt settlement arrangement in addition to inviting submissions from creditors. Amendments Nos. 126 and 127 provide for corresponding amendments to section 94 regarding the personal insolvency arrangement. Amendment No. 82 is a technical drafting amendment which amends the existing text of section 63 to include a necessary cross-reference to section 57. Amendments Nos. 92 and 146 refine the text of sections 74 and 112 in relation to the effect of an approved debt settlement arrangement or personal insolvency arrangement on creditors. Amendments Nos. 93 and 147 aim to clarify the position in those sections in relation to creditor action against another person who may have guaranteed the specified debts concerned. The purpose of Amendment No. 124 is to delete section 92(8), which is now redundant following the amendments regarding excluded and excludable debts.

  Seanad amendment agreed to.

  Seanad amendment No. 69:

Section 57: In page 55, lines 21 and 22, to delete subsection (8) and substitute the following:

“(8) A secured debt shall not be subject to or affected by a protective certificate under this Chapter.”.

  Seanad amendment agreed to.

  Seanad amendment No. 70:

Section 58: In page 55, subsection (3)(a), line 36, to delete “failing to give such direction” and substitute “not making such an order”.

  Seanad amendment agreed to.

  Seanad amendment No. 71:

Section 59: In page 56, lines 3 to 19, to delete subsection (1) and substitute the following:

“(1) Where a protective certificate has been issued, the personal insolvency

practitioner shall as soon as practicable thereafter—
(a) give written notice to the creditors concerned that the personal insolvency practitioner has been appointed by the debtor for the purpose of making a proposal for a Debt Settlement Arrangement and, subject to section 62 (2), invite those creditors to make submissions to the personal insolvency practitioner regarding the debts concerned and the manner in which the debts might be dealt with as part of a Debt Settlement Arrangement, and such notice shall be accompanied by the debtor’s completed Prescribed Financial Statement,

(b) consider any submissions made by creditors in accordance with paragraph (a) regarding the debts and the manner in which the debts might be dealt with as part of a Debt Settlement Arrangement, including any submission made by a creditor with respect to previous or existing offers of arrangements made by the creditor to or with the debtor, and

(c) make a proposal for a Debt Settlement Arrangement in respect of the debts concerned.”.

  Seanad amendment agreed to.

  Seanad amendment No. 72:

Section 59: In page 56, subsection (2)(a), line 26, to delete “debts;” and substitute “debts.”.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Amendments Nos. 73, 83 to 88, inclusive, 90, 96 to 100, inclusive, 137 to 144, inclusive, 151 to 154, inclusive and 182 are related and will be discussed together .

  Seanad amendment No. 73:

Section 59: In page 56, subsection (2)(b)(i), line 29, to delete “section 67, 77 or 78” and substitute “section 67 or 77”.

Deputy Alan Shatter: Information on Alan Shatter Zoom on Alan Shatter This group of amendments deals with procedures for creditors’ meetings relating to proposals for a debt settlement arrangement or personal insolvency arrangement, court approval of a debt settlement arrangement or personal insolvency arrangement, and also with procedures for variation of such arrangements. Amendment No. 83 provides for a more specific reference to the documents required to be given to the creditors prior to a creditors’ meeting to consider a proposal for a debt settlement arrangement. The amendment also makes it clear that where a creditors’ meeting does not take place before the expiry of the protective certificate, the debt settlement arrangement procedure shall be deemed to have come to an end.

Amendments Nos. 84, 85 and 86 are technical drafting amendments to provide for correct cross-referencing consequential to Amendment No. 40. Amendments No. 137, 138 and 139 provide for corresponding amendments to the provisions relating to creditors’ meetings regarding proposals for personal insolvency arrangements.

Amendment No. 87 proposes to replace section 67(3) with new text in order to make the provisions consistent with similar provisions in the Bill, such as those in section 65(2). It also provides that where an amended debt settlement arrangement proposal is prepared, the personal insolvency practitioner should also be required to furnish this proposal to the insolvency service. Amendment No. 142 will make a corresponding amendment to section 105(5), which applies to amended proposals for personal insolvency arrangements.

Amendment No. 88 clarifies that the voting rights exercisable by a creditor at a meeting of creditors to approve a debt settlement arrangement are in proportion to the amount rather than the value of the debt due to that creditor on the day the protective certificate is issued. This is a better expression of the likely situation.

Amendment No. 140 replaces the current section 104 of the Bill in order to set out, in a clearer fashion, all of the relevant factors in regard to the determination and exercise of voting rights at creditors’ meetings in regard to a personal insolvency arrangement. Amendment No. 141 is a technical drafting amendment.

Amendment No. 143 replaces the current text of section 106 with regard to the proportion of creditors required to approve a personal insolvency arrangement. The purpose of the amendment is to clarify the operation of the section. The section has been shortened to reflect the key point, which is the percentage of votes in total and in the secured and unsecured classes. Some other provisions of the section have been relocated to the revised section 104 proposed by amendment No. 140.

Amendment No. 182 proposes to insert a new section in Chapter 6. It sets out how debts in other currencies are to be dealt with in the context of the provisions of the Bill. There are specific references to a foreign currency in section 68(3) and section 104(2). However, I am advised that it would be more appropriate to delete those references and to provide a general currency conversion provision applicable to the three new debt resolution processes instead.

Amendments No. 90 and 144 replace the provisions of section 73 and 111 in regard to the approval by a court of a debt settlement arrangement or personal insolvency arrangement. The text of the sections, while not altered substantially, is now presented in a more coherent fashion in regard to the satisfaction of the eligibility criteria for the insolvency service and the court.

Regarding the variation of debt settlement arrangements and personal insolvency arrangements, amendment No. 73 is consequential on Amendment No. 100, which will delete section 78 of the Bill. This section provided for the process of termination of a debt settlement arrangement by a meeting of creditors. On further reflection with the Office of the Attorney General and Parliamentary Counsel, it is proposed that the section be deleted on the basis that it is not particularly required in the light of the provisions of section 79, which require the involvement of the court. There is no comparable provision in the personal insolvency arrangement.

Amendments Nos. 96 and 151 are required to ensure consistency between the debt settlement arrangement and personal insolvency arrangement provisions of the Bill with regard to the variation of either arrangement. These amendments address inconsistencies between sections 79 concerning the debtor’s consent to a variation of a debt settlement arrangement and the corresponding section 115 concerning consent to the variation of a personal insolvency arrangement.

Amendment No. 97 will remove the discretion previously afforded to the personal insolvency practitioner in regard to the calling of a creditors’ meeting to consider a possible variation in a debt settlement arrangement. Amendments Nos. 98, 99, 152, 153 and 154 aim to clarify the procedures for voting by creditors on a proposed variation of a debt settlement arrangement, or a personal insolvency arrangement.

  Seanad amendment agreed to.

  Seanad amendment No. 74:

Section 59: In page 56, subsection (2)(b)(ii), line 31, to delete “concerned;” and substitute “concerned.”.

  Seanad amendment agreed to.

  Seanad amendment No. 75:

Section 60: In page 57, subsection (2)(b), line 8, to delete “subject to paragraphs (c) and (d),”.

  Seanad amendment agreed to.

  Seanad amendment No. 76:

Section 60: In page 57, subsection (2), lines 13 to 49 and in page 58, lines 1 and 2, to delete paragraphs (c) and (d).

  Seanad amendment agreed to.

  Seanad amendment No. 77:

Section 60: In page 59, lines 3 to 10, to delete subsection (4) and substitute the following:

“(4) For the purposes of subsection (2)(f), and without prejudice to subsection (3), in determining whether a debtor would have sufficient income to maintain a reasonable standard of living for the debtor and his or her dependants under the Debt Settlement Arrangement, regard shall be had to any guidelines issued under section 23*.”.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Amendments Nos. 78, 80, 81, 89, 130, 132 and 133 are related and will be discussed together.

  Seanad amendment No. 78:

Section 61: In page 59, subsection (3), line 30, to delete “Arrangement,” and substitute “Arrangement, and subject to section 62,”.

Deputy Alan Shatter: Information on Alan Shatter Zoom on Alan Shatter This group of amendments deals with the treatment of preferential debts in the debt settlement arrangement and personal insolvency arrangement processes.


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