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Bankruptcy[1] in Irish Law is a legal process, supervised by the High Court whereby the assets of a personal debtor are realised and distributed amongst his or her creditors in cases where the debtor is unable or unwilling to pay his debts.
Bankruptcy in Ireland applies only to natural persons.[2] Other insolvency[3] processes including liquidation and examinership are used to deal with corporate insolvency.
A bankrupt is somebody who has been adjudicated bankrupt by the High Court. Once a debtor is adjudicated bankrupt, bankruptcy law[4] provides for the mandatory vesting of all of the bankrupt's assets and property in the Official Assignee (OA). Under the supervision of the Court, the OA will realise the bankrupt's assets and distribute the assets according to law among the bankrupt's creditors.
The essence of bankruptcy is that the debtor's assets are transferred to an official who administers and realises them for the benefit of all creditors. The purpose is to release the bankrupt from an unsustainable debt burden and to distribute his assets amongst all creditors equally (although certain types of creditor enjoy priorities). The bankrupt person is subject to restrictions and disabilities on trading and on obtaining credit while a bankrupt but leaves the process with their debts forgiven.
The Official Assignee in bankruptcy can challenge and set aside pre-bankruptcy transactions by the bankrupt to make the assets, the subject of those transactions, available to the creditors.
The classic definition of bankruptcy is that: "it is a law for the benefit and relief of creditors and their debtors, in cases in which the latter are unable or unwilling to pay their debts."[5]
Irish bankruptcy law has been the subject of significant recent comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011[6] has started this process and the government has committed to further reform.
- ^ Sanfey, Mark; Holohan, Bill (2010). Bankruptcy Law and Practice (2 ed.). Round Hall. ISBN 978-1-85800-574-4.
- ^ It might be noted that bankruptcy applies to partners in partnerships as a partnership does not have a separate legal personality to that of its members.
- ^ It might be noted that insolvency is not a precondition to bankruptcy in Ireland and unwillingness to pay debts may suffice see: Budd, J. (1972), Bankruptcy Law Committee Report, Dublin: The Stationery Office, p. 30, Prl 2714
- ^ The principal provisions governing Irish bankruptcy law are:
"The Bankruptcy Act 1988". Retrieved 21 May 2011, as amended by "Part 7 of the Civil Law Miscellaneous Provisions Act 2011". Retrieved 21 September 2011;
"Order 76 of the Rules of the Superior Courts". Retrieved 21 May 2011, as substituted by "S.I. 120 of 2012". Retrieved 16 April 2012;
"The European Communities (Personal Insolvency) Regulations 2002". Retrieved 21 May 2011; and
"The European Communities (Corporate Insolvency) Regulations 2002". Retrieved 21 May 2011.
These regulations give effect to the "EC regulation No. 1346/2000 on insolvency proceedings". Retrieved 21 May 2011. - ^ US House of Representatives debate on a bankruptcy bill 1818, quoted in United States v. Pusey 5 Am. L. Times Rep. 122 1873
- ^ "Part 7 of the Civil Law Miscellaneous Provisions Act 2011". Retrieved 21 September 2011.
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