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Thursday 30 November 2023 Dublin: 3°C
Screengrab/Oireachtas Richie Boucher at the Finance Committee earlier this month
Bad Bank

Insolvency chief blasts Bank of Ireland

The state-backed lender’s refusal to engage with personal insolvency legislation is in the crosshairs.

THE DIRECTOR OF the Insolvency Service has lashed out against Bank of Ireland’s policy of opposing debt-write down arrangements with struggling customers.

Speaking at the Oireachtas Finance Committee this morning, Lorcan O’Connor said he was “disappointed by the comments made by one creditor in pariticular to this committee.”

Earlier this month Bank of Ireland told the committee that it would veto any suggestion of a debt write-down by a Personal Insolvency Pracitioner.

Chief Executive Richie Boucher said that “the practice and policy [of the bank] is no debt write down”.

In a reference to statements made by Bank of Ireland, O’Connor said

Making a global policy statement about how they intend to deal with applications does not take full account of the new reality.

He continued: “It is disappointing to see that certain creditors are saying that under no circumstances will they entertain that kind of solution.”

O’Connor also warned that banks who spurn the option of a debt writedown through a PIP would end up losing more when borrowers went into bankruptcy.

“Giving the state the two fingers”

While O’Connor declined to name Bank of Ireland explicitly, Fianna Fail finance spokesman Michael McGrath said:

“We can name names. We all know who they are. Bank of Ireland made it very clear that they would veto any personal insolvency arrangements which involved writing off some mortgage debt.”

He continued:

The banks, in some instances, have given the two fingers to the state and to the insolvency service by saying that they simply will not sign up to one of the main options that was provided for in the legislation.

O’Connor responded that he could understand that view.

Sinn Fein Finance spokesman Pearse Doherty said: “There is a serious issue here…we have a bank saved by the Irish people (and) the CEO of that bank has decided to torpedo the legislation that this government has passed.”


Personal insolvency “out of reach”

McGrath also added that particularly vulnerable debtors who could not offer any assets or cash to their creditor could not avail of a personal insolvency arrangement or a debt settlement arrangement.

O’Connor said: “If all your income is being used for living expenses, and you don’t have anything to offer to creditors, the it’s unlikely that a DSA or PIA would work for you.”

He said that there were other solutions, including bankruptcy, available to people who could not avail of the PIA or DSA options.

Thousands of cases predicted

O’Connor said that the Personal Insolvency Service has “achieved an enormous amount” since it was set up a year ago. He said that the low amount of cases taken to date mirrors the slow uptake of the system in other jurisdictions.

He argued: “Initial uptake is slow but we are confident the number of cases will grow…the statistics point to a trend in the right direction.”

“Thousands will avail of our services by this time next year.”

Column: There are fewer bankruptcies than expected so far this year. Why?>

Family with €600k debt granted court protection under new insolvency arrangements>

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