Rugby Hero Ordered To Pay €2,000

Rugby hero Ronan O'Gara who lives in Cork city with his wife and 10 month old twin babies, has been ordered by the high court to pay almost €2,000 to the company which manages Greystones housing and apartment development.

Mr O'Gara has been named in the latest edition  of debt monitor 'Stubbs Gazette' which shows Charlesland Wood Management management companies 2 registered judgements in the High court on August 11 against Mr O'Gara.

Judgements of €1,290 and €457 against O'Gara means that he is legally ordered to pay money to the management company, on failure of this his personal credit rating may take a blow.

Personal Debt Falls By €563m

In the second quarter this year perosnal debt in Ireland has fallen by €563m, which has mainly been a result from write offs if bad loans, according to statistics from the central bank.

The bank has also said that mortgage debt has decreased by €194m, and has also reported that evidence from credit providers shows that applications for credit-loans is down and creditors are also tightening standards for issuing credit.

Overall, debt owed by private individuals and businesses has fallen by 1.2% (or €4.7bn) in the second quarter of the year.

The number of people being declared bankrupt in England and Wales has hit a new record, according to the government's Insolvency Service.

In the first three months of the year there were a record 19,062 bankruptcies and 10,713 individual voluntary arrangements. The number of companies going bust in England and Wales fell back in the first three months of the year.However the figures were still 54% higher than a year ago.

The insolvency specialists Begbies Traynor predicted that personal insolvencies might rise above 125,000 this year."This reflects both the stresses of high levels of personal debt and rising unemployment and a record number of entrepreneurs going bankrupt on the back of their business's failure," said the firm's chairman Ric Traynor.

Indebted and insolvent individuals could be advised to trave to the UK to petition for bankruptcy in England as they could potentially free themselves from debt after a year.

In 2002, new European insolvency legislation came into force to facilitate cross-border bankruptcies between member states. The regulation covers personal as well as corporate insolvencies, and theoretically (but unintentionally) enables individuals to “forum shop” for the most lenient bankruptcy jurisdiction within the EU, but this aspect of the legislation has received very little attention in Ireland until now.

Historically the level of bankruptcies here has been extremely low. However, developers such as Paddy Kelly, who personally guaranteed the debts of their business and now find themselves insolvent, have little choice but to consider it as an option. One of the main deterrents against this course of action is the severity of the Irish bankruptcy regime.

“In Ireland, if you are bankrupt, normally you will remain an ‘undischarged bankrupt’ for 12 years. It can even last longer,” says Barry O’Neill, a leading insolvency practitioner with Eugene F Collins solicitors. “However, in England, a bankruptcy can end after as little as 12 months.”

In order to petition for bankruptcy in England, an individual’s “centre of main interests” (Comi) must be based there. Mr O’Neill explains that in the case of a company, the concept of Comi is linked to the registered office of a company, “but there [is] no similar starting point for insolvent individuals,” he explains.

However, some insight was provided by a decision of the English court in a 2007 case involving a German doctor who was made bankrupt in England.

The doctor moved to England to work on a temporary basis as a locum. All of his creditors were based in Germany, as was his wife. English bankruptcy officials believed that his Comi was in Germany, and argued that the individual had only moved to England in 2006 and was living in temporary accommodation.

Nevertheless the judge found that the doctor was entitled to change his Comi from Germany to England, and that it was irrelevant that his debts were in Germany.

He also pointed out that there is no minimum period that a person must spend in a member state before it becomes their Comi.

On the basis of this ruling, heavily indebted Irish individuals are being advised to consider setting up residence in England before applying to the court to become bankrupt there.

“If this works successfully, the bankruptcy will end far sooner than it would in Ireland,” Mr O’Neill says.

A bankruptcy period of one year also applies in Northern Ireland, and for logistical reasons this is likely to be an even more attractive location in which to pursue this strategy. According to Mr O’Neill, the same logic would apply in relation to Northern Ireland, but the key difference is that the issue has not yet been tested in court there.

“Although the was attempting to avoid forum shopping, some commentators have disparagingly described England as ‘insolvency paradise’ and the phrase ‘bankruptcy tourism’ has been mentioned from time to time,” he adds.

Although the prospect of bankruptcy “tourists” fleeing the country might set alarm bells sounding for creditors involved in the property business, Mr O’Neill says that the consequences may not be as dramatic as they might fear.

“If a person is declared bankrupt by an English court, the law of England and Wales will apply to the general aspects of the bankruptcy but the regulation specifically states that the law of Ireland will apply to property situated here,” he explains.

This article appears in the print edition of the Irish Times