Prior to the dissolution of the 31st Dail by the Taoiseach on 3rd of February 2016, the Minister for Justice, Frances Fitzgerald signed on the 25th of January 2016 the order establishing that the 29th of January 2016 shall be the day on which a new one year regime for bankruptcy would be introduced in Ireland.

The Bankruptcy (Amendment) Act 2015 (Commencement) Order 2016 (SI No 34 2016), commences the majority of the provisions of the Bankruptcy (Amendment) Act 2015.  The 2015 Act introduces a number of changes, but more particularly it amended s. 85 of the Bankruptcy Act 1988 by reducing the bankruptcy term from 3 years to 1 year.  The Act also shortens the term of some existing bankruptcies.  The 29th of July 2016 now becomes the date of discharge for any person who was adjudged a bankrupt between the 30th of July 2013 and the 29th of July 2015.  If a person was adjudged a bankrupt after 30th of July 2015, then their bankruptcy shall be no longer than one year after the date of the adjudication.

Further, the new legislation reduces the period of the payments adjustment order from 5 years to 3 years (by amending s. 85D of the 1988 Act).

The new rules have been flagged for a period of time and come after the campaign by Willie Penrose TD to reduce the term from 3 years to 1 year.  The reduction in the payment adjustment order will serve as just as significant as the reduction in term for debtors who apply for bankruptcy.  The new provisions do significantly weaken the hand of unsecured creditors in negotiations with their debtors.

For more information contact Colm Kelly Solicitor. ckelly@hcalaw.ie