# Professor Kilburn's views of the Personal Insolvency Bill



## ballaboy (19 Apr 2012)

Have been listening for over a year to all these groups drafting this new Insolvencey Bill .Today attended the FLAC seminar on it,it was a credit to FLAC the best ever I attended.It was addressed by two Foreign experts who left me in no illusion our current Bill is only scrap value.I understand their papers will be up on FLAC website tomorrow would love to see opinions on it


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## Bronte (20 Apr 2012)

Could you elaborate on the ways in which the experts opinion of the new bill is that it's usless?  That's not very heartening news.


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## Brendan Burgess (20 Apr 2012)

Here is Conor Pope's report 

[broken link removed]



> THE GOVERNMENT’S plans to tackle the State’s huge personal debt crisis  will fail unless it rows back on proposals to give financial  institutions a veto on insolvency arrangements, a leading US insolvency  expert has warned.


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## Brendan Burgess (20 Apr 2012)

This is what I took from Prof Kilborn's excellent presentation. Here are the slides, although they don't mean a lot in the absence of the narrative.

Joan Burton was there for the presentation and left immediately afterwards. It is a pity that the Minister for Justice didn't attend the conference. In fact, I didn't see any of the Dept of Justice officials there, but they may have been. 

1) There is no change in the status quo as the banks have a veto. 
I have said this myself in relation to the PIA. If the banks want to do a deal, they can do it now anyway.

Prof Kilborn says that the evidence suggests that the banks will simply not face up their losses, unless they are forced to do so. 

2) A debt settlement does not cause the banks to lose money, it is the insolvency of the borrower which does it.

Again, I have made this point before.  There are 10,000 unsustainable mortgages out there. The money is gone. The banks are not getting it back. Recognising this is not the cause of the losses. 

3) The optimal rate of insolvency is not zero 
Life is risky "illness, divorce, children" .  If no one goes insolvent, it will mean that the banks are too careful. That people are taking no risks - either in business or life.

I have argued that the rate of repossession in Ireland is way too low. I asked Prof Kilborn what he thought the optimal rate of repossession should be.  He gave a vague answer in public. 

4) The best system seemed to be in France where the Banque de France used persusasion to get the banks to do deals.


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## Bronte (20 Apr 2012)

Brendan was this issue not discussed at the meeting you had with committee?


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## 44brendan (20 Apr 2012)

So, we are awaiting the final outcome of the new Insolvency legislation with baited breath. 
Brendan, I acknowledge you made your points in front of the committee and all were valid and needed to be included in this legislation. However, I am somewhat cynical by nature & have never trusted decisions made by commitees (refernce the camel, as a horse designed by a committee). I suspect that the fundamentals of the proposed legislation will remain unchanged and we will end up with proposals that look pretty, but are ultimately useless in addressing the major problems of those in need of assistance. If I'm wrong on this I will retract all of my negative thoughts on committee/public service output


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## ballaboy (20 Apr 2012)

Brendan thanks for answering question I was asked,and much better than I would,am I taking the wrong impression that after we heard yesterday it back to the drawing board,we away off the mark,it hard to discuss until the slides come up.Looked at list of people who attended Lawyers well represented accountants very thin on the ground.Was very impressed from begining too end.If I was Enda I would be sending a blank cheque to professor Kilburn to come and draft the Bill


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## Brendan Burgess (20 Apr 2012)

Bronte said:


> Brendan was this issue not discussed at the meeting you had with committee?



Which particular issue? 

The Oireachtas Committee on the Bill? 

My submission is on their website I think. Here is the summary

Here is a summary of my submission, slightly updated for a meeting with some TDs arising from the submission.

*[FONT=&quot]Key Points[/FONT]*
  [FONT=&quot]The Debt Relief Certificate, The Debt Settlement Arrangement and the reduced bankruptcy term are welcome proposals. 
[/FONT]
[FONT=&quot]
[/FONT]
  [FONT=&quot]Contrary to public opinion, the measures in  place at present, especially, the Deferred Interest Scheme, cater well  for the majority of struggling borrowers. The proposal in the Keane  Report to appoint 100 mortgage advisors would help to strengthen the  negotiating position of struggling borrowers with their lenders. [/FONT]


  [FONT=&quot]The problem is not too many repossessions. The  problem is that the lenders are not allowing those with unsustainable  mortgages to surrender their homes. 
[/FONT]
[FONT=&quot][/FONT]
  [FONT=&quot]Around 10,000 borrowers have genuinely  unsustainable mortgages and no amount of restructuring will resolve  their problems. They will be genuinely better off if they surrender  their home and deal with any mortgage shortfall under the Debt  Settlement Arrangement. The mortgage shortfall should be settled over 3  years, the same period as bankruptcy. This could be reduced further by  any time spent in the Mortgage Arrears Resolution Process.[/FONT]
[FONT=&quot]
[/FONT]
  [FONT=&quot]Mortgages are cheap because the banks have  security. If the proposed legislation weakens that security, it will be  more difficult to get mortgages and they will be more expensive. 80% of  mortgage holders are paying their mortgage on schedule. They are the  vast majority although we don’t hear much from them. 
[/FONT]
[FONT=&quot]
[/FONT]
  [FONT=&quot]The proposed Personal Insolvency Arrangement [/FONT]


·        [FONT=&quot]Doesn’t help the 10,000 borrowers with unsustainable mortgages [/FONT]
·        [FONT=&quot]Isn’t needed by other struggling mortgages holders who will recover in time[/FONT]
·        [FONT=&quot]Will push up the costs of borrowing for all mortgage holders[/FONT]
      [FONT=&quot]The  PIA should be scrapped – it is an expensive bureaucratic arrangement  which will help nobody except a raft of administrators and insolvency  trustees at the expense of borrowers and lenders[/FONT]


Brendan


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## ballaboy (22 Apr 2012)

Following is link to Flac website on Seminar.
[broken link removed]


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