Property developers, financiers and prominent businessmen are seeking domicile in the United Kingdom and elsewhere in a bid to avoid Irish bankruptcy laws, according to legal sources.

The Irish Independent has learned that several high profile builders and executives have secured or are in the process of establishing residency in Britain where bankrupts can avail of a "fresh start" in less than two years compared with Ireland's cumbersome 12-year term under the 1988 Bankruptcy Act.

The spectre of relocation raised its head earlier this week when National Irish Bank informed the Commercial Court that financier Niall McFadden, whom it is suing for €6.3m, had relocated to London.

Several legal sources in London and Dublin have confirmed that they have advised on relocation or have received queries from individuals about the benefits of moving to another European country where bankruptcy procedures are perceived to be more "user friendly".

The bank, in a written submission, said it feared Mr McFadden -- who put together a €28m deal to purchase 'Buy and Sell' back in 2007 and which has subsequently been sold on -- had relocated to London for the purpose of European Insolvency Regulations and in an attempt to avail of "a perceived more debtor-friendly" bankruptcy procedure.

Loathed

The practice of forum shopping, where litigants seek domicile in another EU country to protect their assets, has been trail blazed by wealthy husbands in divorce and warring parents in contested custody battles.

Now, large borrowers indebted to banks are seeking domicile outside of Ireland in a bid to avoid our bankruptcy regime which is loathed by creditors and debtors alike.

"Ireland's bankruptcy laws serve no one," said Gavin Simons, partner and head of Corporate Restructuring and Insolvency at law firm BCM Hanby Wallace.

Mr Simons, who represented secured creditors in developer Liam Carroll's Zoe Group which last night went into official liquidation, said that Ireland's personal insolvency regime needs to be reformed.

Last week's renewed Programme for Government includes a commitment to create a new system of personal insolvency regulations that will allow for a statutory, non-court-based debt-settlement regime.