Section 141 Consultation ISI Submission to the Department of Justice and Equality June 2017 ISI Tackling problem debt, together This page is left intentionally blank Insolvency Service of Ireland – Section 141 Submission – June 2017 Page 2 Insolvency Service of Ireland Submission to the Department of Justice and Equality in response to the consultation arising from Section 141 of the Personal Insolvency Act Table of Contents 1 Executive Summary ................................................................................................. 9 2 Introduction........................................................................................................... 13 2.1 Terms of Reference for the Review ........................................................................... 13 2.2 Approach to the submission ..................................................................................... 13 2.3 Overview of the submission ...................................................................................... 13 2.4 Contents of the submission ....................................................................................... 14 3 The Debt Landscape and International Comparisons ........................................... 17 3.1 Introduction .............................................................................................................. 17 3.2 The Debt Landscape 2012 to the Present ................................................................. 17 3.2.1 Central Bank Data .......................................................................................................... 17 3.2.2 European Central Bank .................................................................................................. 19 3.2.3 ISI Data .......................................................................................................................... 19 3.3 International Comparison – Take up of Insolvency Solutions ................................... 20 3.4 Conclusion ................................................................................................................. 22 4 ISI to approve DRNs, PCs, PC Extensions, DSAs, PIAs and Variations ................... 25 4.1 Introduction .............................................................................................................. 25 4.2 Constitutional Property Rights and the Administration of Justice ............................ 26 4.2.1 Property Rights .............................................................................................................. 26 4.2.2 Administration of Justice by Body other than the Courts ............................................. 27 4.3 Noteworthy features of the DRN, PC, DSA and PIA .................................................. 29 4.4 Conclusion ................................................................................................................. 32 5 Additional DRN Enhancements ............................................................................. 33 5.1 Introduction .............................................................................................................. 33 5.2 Recommended DRN Improvements ......................................................................... 34 5.2.1 Term of supervision ....................................................................................................... 34 5.2.2 Asset Threshold ............................................................................................................. 35 5.2.3 Additional income ......................................................................................................... 35 5.2.4 Eligibility criteria relating to undervalue and preference ............................................. 35 5.2.5 Power to amend DRNs .................................................................................................. 36 Insolvency Service of Ireland – Section 141 Submission – June 2017 Page 3 5.2.6 Distributions to DRN creditors ...................................................................................... 36 5.2.7 Removal of “excludable creditor” category .................................................................. 36 5.2.8 ISI ability to seek Court direction .................................................................................. 36 5.3 Conclusion ................................................................................................................. 37 6 Additional PC, DSA and PIA Enhancements .......................................................... 39 6.1 Introduction .............................................................................................................. 39 6.2 DSA ............................................................................................................................ 39 6.3 PIA ............................................................................................................................. 40 6.4 Recommended Arrangement Improvements ........................................................... 41 6.4.1 Generic PC ..................................................................................................................... 42 6.4.2 Extension of PC .............................................................................................................. 42 6.4.3 Minor operational changes to the PC process .............................................................. 42 6.4.4 Interlocking/Joint Applications ..................................................................................... 42 6.4.5 PIP delegation ............................................................................................................... 43 6.4.6 Creditor meeting adjournments ................................................................................... 43 6.4.7 Application to the appropriate court for directions ...................................................... 43 6.4.8 Section 115A Reviews ................................................................................................... 43 6.4.9 Removal of certain ‘gateway provisions’ ...................................................................... 44 6.4.10 Removal of ‘excludable creditor’ category.................................................................... 45 6.4.11 Other ............................................................................................................................. 45 6.5 Conclusion ................................................................................................................. 45 7 Creditor and Debtor Engagement ......................................................................... 47 7.1 Creditor and Debtor Engagement - Introduction ...................................................... 47 7.2 Creditor/PIP engagement.......................................................................................... 47 7.3 Debtor Engagement - Introduction ........................................................................... 48 7.4 Psychology of debt .................................................................................................... 48 7.5 Awareness campaigns ............................................................................................... 49 7.6 Conclusion ................................................................................................................. 50 8 Supplementary Issues ........................................................................................... 51 8.1 Introduction .............................................................................................................. 51 8.2 Abhaile Service .......................................................................................................... 51 8.3 Small and Medium Entrepreneurs ............................................................................ 52 8.4 EU Developments ...................................................................................................... 52 8.5 Conclusion ................................................................................................................. 53 Insolvency Service of Ireland – Section 141 Submission – June 2017 Page 4 Appendix 1 - Terms of the Department’s Consultation ............................................... 55 Appendix 2 - The ISI Functions, Mission and Strategic Direction ................................. 57 A2.1 ISI Mission Statement .................................................................................................... 57 A2.2 ISI Strategic Goals .......................................................................................................... 57 A2.3 ISI Functions .................................................................................................................. 57 Appendix 3 – Statistical Information ............................................................................ 59 A3.1 ISI Yearly Statistics: Applications, PCs issued and Arrangements Approved ................ 60 A3.2 DRN, DSA and PIA Debt Profile 2014 - 2016 .................................................................. 61 A3.3 DRN Debtor Profile 2014 - 2016 .................................................................................... 63 A3.4 DSA Debtor Profile 2014 - 2016 .................................................................................... 64 A3.5 PIA Debtor Profile 2014 - 2016 .....................................................................................