Personal Insolvency Act
The Act provides non-judicial/non-court-based mechanisms for dealing with personal debt. A Debt Relief Notice allows for the discharge of relatively small levels of consumer debt.
Debt Settlement Arrangements and Personal Insolvency Arrangements provide for the agreed settlement of unsecured debt and to some extent secured debt, less than €3 million in total on the non-judicial basis. Agreements may become binding on creditors with the consent of a specified percentage of all of them.
The Personal Insolvency Act 2012 established the Insolvency Service of Ireland. The Insolvency Service considers applications for Debt Relief Notices and protective certificates in connection with Debt Settlement Agreements and Personal Insolvency Agreements.The Service is responsible for overseeing insolvency arrangements. It is an independent body.
The Act also reformed bankruptcy law in certain relatively minor respects.
The Insolvency Service of Ireland
The Insolvency Service of Ireland was established under the Personal Insolvency Act 2012. The ISI is a corporate body with perpetual existence. It may sue and be sued in its own name. It is independent in the exercise of its functions.
The Insolvency Service of Ireland is the monitoring and implementation body in respect of debt relief, debt settlement and personal insolvency arrangements. It deals with applications for protective certificates which facilitate reaching an arrangement. The principal functions of the service are to monitor arrangements in relation to personal insolvency, consider debt relief notices. It maintains a number of registers. It regulates approved intermediaries and personal insolvency practitioners.
The manner in which the Insolvency Service is constituted is broadly similar to that of most other governmental bodies. There are provisions for
- the composition of the Insolvency Service.
- Director and Staff of Insolvency Service.
- strategic plans.
- business plan.
- accounts and audit.
- appearance before Committees of Dáil Éireann
- appearance before other committees of Houses of Oireachtas.
The Insolvency Service Functions
The functions of the Insolvency Service of Ireland are as follows. It
- monitors the operation of the arrangements relating to personal insolvency;
- considers applications for Debt Relief Notices;
- processes applications for protective certificates;
- maintains the Registers established under Act;
- promotes public awareness and understanding of matters relating to personal insolvency, and provides information on the working of the Act and the Bankruptcy Act;
- advises the Minister on any matter relating to its functions;
- authorises a person or class of persons to perform the functions of an approved intermediary
- supervises and regulates persons or classes of persons authorised to perform the functions of an approved intermediary;
- authorises individuals to carry on practice as personal insolvency practitioners;
- supervises and regulates persons practising as personal insolvency practitioners;
- prepares and issues guidelines as to what constitutes a reasonable standard of living and reasonable living expenses;
- arranges for the provision of such education and training, in relation to the performance by them of their functions of approved intermediaries, personal insolvency practitioners and other persons, as it thinks fit,
- administers the functions assigned to the Official Assignee by the Bankruptcy Act
- collects, analyses and disseminates information and statistics on the operation of the Act and of the Bankruptcy Act
- monitors and analyses developments the situation of insolvent debtors and trends in, and patterns of, debtor and creditor behaviour,
- develops strategies for communicating with the public aimed at promoting the use of insolvency arrangements and enhancing their effective application,
- contributes to the development of policy in the area of personal insolvency, and;
- carries out other duties and exercise any other powers assigned to it by or under this Act.
Publicity and Registers
The Insolvency Service maintains the registers of Debt Relief Notices, Protective Certificates, Debt Settlement Arrangements and Personal Insolvency Arrangements. They may be maintained electronically as the Insolvency Services determine. The registers are available for inspection by the public.
The Service has a broad remit to disseminate information in relation to its services. It is an independent agency which its own executive and staff. It is headed by a director.
The Insolvency Service publishes a number of other guides on its website. They cover the principal arrangements and processes.
Personal Insolvency Practitioners
A personal insolvency practitioner who is licensed by the Insolvency Service plays an important role as intermediary between the debtor, the Insolvency Service and the courts. The determination of eligibility, the formulation of terms and the approval of creditors, is undertaken primarily by the insolvency practitioner.
The practitioner applies to the Insolvency Service for certain approvals, and the Insolvency Services applies to the court for confirmation of the arrangement. Aggrieved creditors and third parties may apply to the court on certain limited grounds. For the most part, however, the role of the court is minimal.
Regulation or Personal Insolvency Practitioners
Prior to the Personal Insolvency Act, there was no formal regulation of personal insolvency practitioners. The Minister may license or designate a body to regulate personal insolvency practitioners. An existing professional regulatory body may be appointed. The appointed regulator may authorise persons to carry out business as personal insolvency practitioners.
Authorisations are subject to such conditions as are provided. An indemnity bond is required of a personal insolvency practitioner. There must be a compensation fund for the heft and misuse of funds.
A person shall not carry on business as an insolvency practitioner unless there is an indemnity bond for at least €600,000 to cover theft or misappropriation of funds of debtors and creditors or the person is protected by a compensation fund to indemnify debtors and creditors in respect of theft or misappropriation by that person. The compensation fund operated the relevant body must have at least €9 million to cover the above contingencies.
The Insolvency Service may authorise a person, or a class of person, to perform the functions of an approved intermediary. An approved intermediary shall not charge a debtor any fee in connection with the performance by the approved intermediary of his or her functions in relation to Debt Relief Notices.
An approved intermediary is not liable in damages to any person for anything done or omitted to be done when acting (or purporting to act) as an approved intermediary, unless the act or omission concerned was in bad faith.
he Insolvency Service may, out of the proceeds of fees charged by it , make payments to an approved intermediary in connection with the performance of his or her functions under this Chapter.
Where an approved intermediary resigns from the role of approved intermediary 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.
Approved Intermediary Regulations
The Insolvency Service, may by regulations provide for any of the following for the purposes of the authorisation, regulation and supervision of approved intermediaries and the protection of debtors and creditors who are or may become specified debtors or specified creditors
- the requirements applicable to the authorisation of persons as approved intermediaries under this section, and the dealings of an approved intermediary with the Insolvency Service;
- the records, including files and accounts, to be maintained, including in electronic form, by an approved intermediary;
- the requirements to be met by an approved intermediary when handling complaints against that approved intermediary;
- the qualifications (including levels of training, education, expertise and experience) or any other requirements (including required standards of competence) for the authorisation of persons as approved intermediaries under this section;
- any other matter relating to the authorisation, supervision or regulation of approved intermediaries which is incidental to or is considered by the Insolvency Service to be necessary or expedient for the said purposes or all or any of the matters referred to in this subsection.
The regulations may provide for the requirements to be met in the performance of their functions under this Act by approved intermediaries including, without limiting the generality of the foregoing, in relation to:
- the public interest;
- the duties owed to debtors and creditors who are or may become specified debtors or specified creditors;
- the professional and ethical conduct of approved intermediaries;
- the maintenance of the confidentiality of the information of debtors and creditors who are or may become specified debtors or specified creditors;
- case management in respect of debtors who are or may become specified debtors;
- conflicts of interest;
Regulations may provide for the withdrawal of an authorisation of a person where he or she no longer meets the criteria for such an authorisation prescribed in those regulations.
Special Circuit Court Insolvency Judges I
The Personal Insolvency Act provides for the appointment of such number of specialist judges of the Circuit Court as may be fixed by statute. Any of the following are qualified to be specialist judges of the Circuit Court
- County registrar
- District Court judge,
- practising barrister or practising solicitor of not less than 10 years standing.
Specialist judges are appointed by the Minister pursuant to recommendations by the Judicial Appointments Board. They shall take such course or courses of education as may be required by the Chief Justice or by the President of the Circuit Court.
Special Circuit Court Insolvency Judges II
Specialist judges shall be assigned to Circuit Court circuits. Where a Specialist judge is permanently assigned to a Circuit, the Government at his or her request may if they think fit terminate the permanent assignment and appoint him to another circuit.
A Specialist judge may be appointed to two or more circuits. More than one specialist judge may be appointed to the same circuit.
The President of the Circuit Court may fix in respect of the Circuit, places where matters before Specialist judges are to be heard and the times when matters to be heard. All Circuit judges other than, Specialist judges shall rank in accordance with their order of appointment
Functions of Specialist Judges
A specialist judge of the Circuit Court may perform functions conferred on him or her under the Personal Insolvency Act. Future legislation may confer further powers on such judges if the Oireachtas so decide. The functions conferred on specialist judges have been progressively increased.
A Specialist judge may make any of the orders, that may be made by a County Registrar under the Courts, and Court Officers Act 1995. See generally the sections on the jurisdiction of County Registrars, which is in some respects, is similar that exercised by Masters in Superior Courts.
The specialist judge may perform functions and exercise his powers in respect of proceedings within his jurisdiction, that are before the Circuit Court in the relevant circuit. He may hear in any place in the State outside the relevant circuit, matters which he has the power to hear and determine within that circuit, which in his opinion should be dealt with as a matter of urgency.
A Specialist judge may adjourn proceedings or any part of proceedings generally to another hearing, or to any judge of the Circuit Court within the relevant circuit. The salaries of Specialist judges are fixed by law. The number of special judges was capped at 8 under the 2012 Act.
Where the total liabilities of the debtor exceed €2,500,000, the High Court has exclusive jurisdiction. In other cases, the Circuit Court is the appropriate court. Special Circuit Court judges have been appointed, with jurisdiction principally in insolvency matters. Applications for a Debt Relief Notices is made by the ISI to the relevant Circuit Court.
The Circuit Court within the area in which the debtor is resident at the date of the application or has resided within one year is the appropriate court. Alternatively, where the debtor to whom the application relates has a place of business at the time of the application or within one year, it may be made in that Circuit.
The court rules at both High Court and Circuit Court level allow for electronic filing of documents. Electronic filing is not mandatory. The court officers must be satisfied that the electronic use of hardware and data storage media and communication systems used in the filing, delivering, lodging documents and receiving information are compatible with those used in the relevant court office. It must be satisfied with user naming conventions, e-mail addresses, passwords, signatures, seals, digital signatures unique identification codes, and other means of authenticating documents which are delivered, filed and lodged by electronic means in order to ensure security and authenticity.
It must be satisfied that the user will use appropriate firewalls, antivirus and other tools as may be required to avoid damage to the information systems used in the court office. It must be satisfied that the user will take steps and use such practices as may be specified to ensure virus and other harmful material does not enter the offices’ system. It must be satisfied the that the data can be organised, identified, coded, indexed, and produced in print form if required.
A document transmitted by the Insolvency Service of Ireland or a personal insolvency practitioner who uses electronic means shall be authenticated and the identity of the person in whose name it is issued shall be verified by being transmitted from an information system or e-mail address accepted for those purposes by the proper court office using appropriate authentication issued for that purpose by the office.
There may be a digital signature. The office may revoke an authorisation to use the above procedures if they’re not satisfied that the conditions have been complied with and are being complied with on an ongoing basis.
Subject to compliance with the above conditions, the court offices may authorise or require the Insolvency Service of Ireland, a PIP or others to file, lodge and deliver documents by electronic means to the court offices.
Electronic Orders and Pleadings
Any originating document judgement or order in proceedings may be issued in an electronic form. Other documents and information which may be used in the proceedings be transmitted by electronic means.
An originating document submitted electronically is issued by the court offices and is given a record number. A notice of motion by electronic means is issued when assigned a return date. Documents to be filed may be transmitted electronically by PDF or another specified format. Wherein a statutory declaration or affidavit is required, it may be sent in PDF format.
The originating document, notice of motion or a printed copy of the document is treated as an original. A proper officer of the court may certify any printed version as a certified copy of the original.
Where documents are filed electronically, the statutory declaration or affidavit bearing the original manuscript signature is to be retained for seven years by the person who has filed the same.
Orders and protection certificates are to be authenticated by incorporation of the proceedings’ record numbers.
There is provision for delivery of documents by non-electronic means by parties to proceedings. In this case, they are filed or lodged in the proper office by way of print copy in the usual way. The general principles of the Circuit or Superior Court Rules apply.
The High Court Rules
High Court proceedings are issued in the Central Office. It may authorise or require the Insolvency Service, PIPs debtors or creditors to deliver documents electronically. The rules and procedures applicable to debt settlement arrangements and personal insolvency arrangements are applicable to variations of them.
The court may give directions in relation to the conduct of personal insolvency arrangements. Case management directions may be given in relation to any the key applications. The court may give directions and orders as it appears convenient for the determination of the matter in a manner which is just expeditious and likely to minimise costs. This may include
- directions as to the service of notice on persons;
- orders fixing time limits;
- directions for the production of documents;
- directions for exchanging memorandum and papers for the purpose of agreeing matters;
- directions on matters to be determined by oral evidence where it appears that the court is likely to involve a substantial dispute of fact or otherwise necessary or desirable in the interest of justice;
- directions for the furnishing written submissions by the parties,
- directions for publication of notice of the hearing.
There is provision for the correction of a clerical mistake. Depending on the extent to which third parties are affected documents may be corrected on foot of a hearing on notice to those parties or in other cases without a hearing.
Circuit Court Rules
The vast majority of cases are dealt with at Circuit Court level. A new class of special insolvency judges have been appointed.
Broadly similar procedures apply under the Circuit Court rules as under the High Court Rules. The court may correct mistakes and orders with or appropriate without notice to parties affected.
The Circuit Court has case management powers. The court may give such orders and make such directions for the management of the matter as appear convenient for the determination of the matter in a manner that is just expeditious and likely to minimise cost. It may include
- directions for the service of notices on parties;
- fixing time limits for steps;
- directing the productions of documents;
- directing the exchange of memorandum between the parties for the purpose of agreeing issues; directing which matters are to be determined on oral evidence, whether there is a substantial dispute of fact or where it desirable or necessary in the interest of justice;
- directing the furnishing of written submissions;
- direction as to publication of notices.
The usual provisions for the service of court documents apply under both the Rules of the Superior and the Circuit Court rules. Accordingly, personal service is generally required unless dispensed with at High Court level. Registered post is usually sufficient at Circuit Court level.
Debt relief Notice
All Debt Relief Notice applications are made to the Circuit Court. The application, certificates of the ISI confirming that the application is in order, and supporting documentation are filed. On the relevant return date, the court may either issue the certificates if the criteria are satisfied, refused to issue it, adjourn the application or direct a hearing.
Applications or leave during the suspension period to commence legal proceedings execute or otherwise take action inconsistent with the moratorium are made by motion to the appropriate court.
The Insolvency Service may apply for directions in relation to matters arising in connection with the debt relief notice. The application is made by notice of motion. It should set out the directions and reliefs sought including evidence of the alleged non-compliance of other facts or circumstances relevant to the application and order sought. The application and affidavits are served on the debtor, 21 days beforehand. A replying affidavit may be made.
Debtors or creditors may apply to the court during the supervision period where they are aggrieved by an act omission or decision of the Service. The application is brought by motion, and the proceedings are based on affidavit.
Protective Certificate Pre-Arrangement I
The application for a protective certificate in a debt settlement arrangement is the originating document in the proceedings concerning the debt settlement arrangements.
The ISI seek a protective certificate in the Circuit (or rarely the High) Court by submitting an application in the prescribed form. An Insolvency Service certificate is submitted with supporting documentation and certificates as to certain matters.
On the first court date, the court may if satisfied that the eligibility criteria have been satisfied issue a protective certificate. If not satisfied, it may refuse the application or adjourn it. It may direct a hearing to be held. The Insolvency Service, PIP and debtor are not required to attend on the first date.
Protective Certificate Pre-Arrangement II
Where a hearing is directed, the parties are notified and required to attend. The nature of the evidence which the court requires is notified to them. Notice is given as to whether it may be accepted on affidavit.
An application to extend the period of protection may be made on notice of motion. Broadly similar criteria apply to those above.
Creditors may apply to court commence or continue proceedings or execute.
There is provision for application by aggrieved creditors against the issue of a protective certificate.
Approving the Arrangement
At the application for the initial consideration of the arrangement, the court may give directions and orders. If no objections are made, the court may approve the DSA. It may if it is not satisfied with notice to creditors, refuse the application. It may adjourn the matter. It may require further evidence.
Where the court directs a hearing, the registrar is directed to notify the Insolvency Service and the PIP of the time fixed.
There is provision after the approval of a DSA or PIA for an objection application by a creditor. In each case, the application is made by notice of motion in the proceedings served on the relevant parties. It is supported by an affidavit justifying the grounds.
Application to Terminate
An application may be made to terminate the DSA during its period on the basis of
- material inaccuracy or omission in the personal financial statement;
- failure to satisfy eligibility criteria;
- failure to comply with duties under the arrangement;
- commission of offences;
- arrears of payments up to three months under the arrangement;
- failure to carry out any of the terms,
- unreasonable refusal to consent to a variation.
On the application to the court, the application may be dismissed, or the DSA or PIA may be terminated or varied by order to propose a variation. In each case, the application is based on affidavit.
Personal Insolvency Arrangement
Broadly similar procedures apply in respect of a person insolvency arrangement. The initial founding proceeding is the application for a protective certificate. On the first court date, it may be granted, refused or directions may be given for a hearing. Where a hearing is ordered, directed to Registrars to give notice to the insolvency service and notification of the evidence required and the manner in which it is to be submitted.
There is a similar provision for applications to suspend or continue the protective certificates. Creditors may apply to issue legal proceedings or execute notwithstanding the certificate. An aggrieved creditor may apply to the court to set aside the certificate.
The provisions for notice of objection are by way of application by the creditor.
The court approval of the PIA is made on application based on certificates of the results of the meeting, a true copy of the PSA and the confirmation of the eligibility of the debtor.
The court may approve the application on the first date if there are no objections. If there are objections, it is likely to adjourn the matter or direct a hearing.
There are provisions for application for termination of a personal insolvency arrangement which are similar to those in respect of a debt settlement arrangement.
There is a range of offences in the personal insolvency legislation. It is an offence knowingly or recklessly to provide information which is false or misleading in a material respect in relation to an application,..
A person who
- fails to furnish records to the Insolvency Service;
- destroys, conceals, alters or falsifies financial records;
- makes false entries, disposes of or alters any financial records
for the purpose of obtaining an insolvency arrangement or obtaining a protective certificate avoiding obligations under arrangements or avoiding statutory obligations is guilty of an offence.
A person who is the subject of a debt relief notice, debt settlement arrangement or a personal insolvency arrangement is guilty of an offence if he or she intentionally fails to comply with his obligations of disclosure or provides information to the Insolvency Service in connection with such an obligation, or otherwise in connection with the performance by the Insolvency Service , knowing the information to be false or misleading in a material respect.
A person who is party, as a debtor, to a debt settlement arrangement or personal insolvency arrangement is guilty of an offence if he or she intentionally fails to comply with an obligation to disclose changed circumstances or of error or ommissions in statements or provides information to the Insolvency Service in connection with such an obligation, or otherwise in connection with the performance by the Insolvency Service of its functions under Chapter 3, knowing the information to be false or misleading in a material respect.
A person is guilty of an offence if he makes or causes any transfer or gift of value not less than €400 with the purpose of avoiding obligations, obtaining an insolvency arrangement, obtaining a protective certificate, avoiding obligations under Debt Settlement Arrangement or avoiding obligations under the Act.
It is an offence for a person to obtain credit for more than €650 without informing the prospective creditor that he is the subject of a Debt Relief Notice, Debt Settlement Arrangement or Personal Insolvency Arrangement.
A person guilty of an offence under the legislation may be prosecuted summarily or on indictment by the Insolvency Service. He is subject to a Class C fine or imprisonment not exceeding 12 months or both on summary conviction and imprisonment up to five years and a €100,000 fine on conviction on indictment.
References and Sources
Burke & Comyn Personal Insolvency Law 2014
Bracken Practioner’s Personal Insolvency Handbook 2013
Law Society (Wright) Insolvency Law 2009
Sanfey & Holohan Bankruptcy Law & Practice2nd Ed 2010
Farry, Holohan Consolidated Bankruptcy & Personal Insolvency Legislation2013
Forde, Kennedy & Simms Company Insolvency 2015
Forde & Simms Bankruptcy Law 2nd Ed 2009
Insolvency Law and Practice (Report of the review committee chaired by Sir Kenneth Cork CBE, 1982, Cmnd 8558) (the Cork report)
V Finch, Corporate Insolvency Law: Perspectives and Principles 3rd Ed 2017
RM Goode, Principles of Corporate Insolvency Law (4th Ed, 2011)
A Keay and P Walton, Insolvency law: corporate and personal (4rd Ed, 2017)
Marsh Bankruptcy Insolvency and the Law 2016
WW McBryde, Bankruptcy 2nd Ed, 1995
Butterworths Insolvency Law Handbook 14th Ed 2012
Core Statutes on Insolvency Law and Corporate Rescue (annual editions)
Personal Insolvency Legislation
Personal Insolvency Act 2012
Personal Insolvency (Amendment) Act 2015
Personal Insolvency Act 2012 (Part 6) (Commencement) Order 2013, S.I. No. 14 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 2) Order 2013, S.I. No. 63 of 2013
Personal Insolvency Act 2012 (Establishment Day) Order 2013, S.I. No. 64 of 2013
Personal Insolvency Act 2012 (Authorisation and Supervision of Personal Insolvency Practitioners) Regulations 2013, S.I. No. 209 of 2013
Personal Insolvency Act 2012 (Authorisation of Approved Intermediaries) Regulations 2013, S.I. No. 216 of 2013
Personal Insolvency Act 2012 (Personal Insolvency Practitioner Authorisation and Renewal of Authorisation Prescribed Fees) Regulations 2013, S.I. No. 246 of 2013
Personal Insolvency Act 2012 (Accounts and Related Matters) Regulations 2013, S.I. No. 247 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 3) Order 2013, S.I. No. 285 of 2013
Personal Insolvency Act 2012 (Value of interest in property) Regulations 2013, S.I. No. 330 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Personal Insolvency Arrangement Application Form) Regulations 2013, S.I. No. 331 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Debt Settlement Arrangement Application Form) Regulations 2013, S.I. No. 332 of 2013
Personal Insolvency Act 2012 (Prescribed Debt Relief Notice Application Form) Regulations 2013, S.I. No. 333 of 2013
Personal Insolvency Act 2012 (Schedule of Creditors) Regulations 2013, S.I. No. 334 of 2013
Personal Insolvency Act 2012 (Procedures for the Conduct of Creditors’ Meetings) Regulations 2013, S.I. No. 335 of 2013
Personal Insolvency Act 2012 (Notification in relation to Excludable Debt) Regulations 2013, S.I. No. 337 of 2013
Personal Insolvency Act 2012 (Additional Information to be contained in the Registers) Regulations 2013, S.I. No. 356 of 2013
Personal Insolvency Act 2012 (Part 4) (Commencement) Order 2013, S.I. No. 462 of 2013
Personal Insolvency Act 2012 (Prescribed Fees in Bankruptcy Matters) Regulations 2013, S.I. No. 465 of 2013
Personal Insolvency Act 2012 (Prescribed Financial Statement) Regulations 2014, S.I. No. 259 of 2014
Personal Insolvency Act 2012 (Regulatory Disclosure Statement of a Personal Insolvency Practitioner) Regulations 2014, S.I. No.319 of 2014
Personal Insolvency Act 2012 (Written Statement Disclosing All of the Debtor’s Financial Affairs) Regulations 2015, S.I. No. 416 of 2015
Personal Insolvency Act 2012 (Prescribed Fees) Regulations 2015, S.I. No. 620 of 2015
Personal Insolvency Act 2012 (Renewal of Authorisation of Personal Insolvency Practitioners) Regulations 2016, S.I. No.226 of 2016
Justice Courts and Civil Law (Miscellaneous Provisions) Act 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part8) (Commencement) Order 2013, S.I. No. 286 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part 7) (Commencement) Order 2013, S.I. No. 463 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Section 2) (Commencement) Order 2014, S.I. No. 334 of 2014
Personal Insolvency (Amendment) Act 2015 (Commencement) Order 2015, S.I. No. 414 of 2015
Personal Insolvency (Amendment) Act 2015 (Commencement) (No. 2) Order 2015, S.I. No. 514 of 2015