PIAs on hold pending amendment to legislation

[Brendan Burgess]

Charlie Weston reports that the Insolvency Service has suggested to PIPs that they seek to defer court hearings until the legislation has changed, as there is ambiguity in the legislation.

Q: What exactly is this problem?
A: According to a "confidential" memo from the Insolvency Service a personal insolvency deal (PIA) or a debt settlement arrangement (DSA) needs the support of lenders who hold 65pc of the value of debts owed.
But the wording of the legislation could be interpreted to mean that an official debt deal also needs the support of more than 50pc by number of all lenders owned money.
The fear is that small creditors, like credit unions, could collapse proposed debt deals by outvoting banks in a creditors' meetings. This was never the intention of the Personal Insolvency Act 2012.

Section 110 of the Act

(a) a majority of creditors representing not less than 65 per cent of the total amount of the debtor’s debts due to the creditors participating in the meeting and voting have voted in favour of the proposal,

(b) creditors representing more than 50 per cent of the value of the secured debts due to creditors who are—

(i) entitled to vote, and

(ii) have voted,

at the meeting as secured creditors have voted in favour of the proposal, and

(c) creditors representing more than 50 per cent of the amount of the unsecured debts of creditors who—

(i) are entitled to vote, and

(ii) have voted,

at the meeting as unsecured creditors have voted in favour of the proposal.

 

[Brendan Burgess]

It's astonishing that no one noticed this discrepancy until now. I am sure that I have read this section a few times, and had not noticed it. I suspect that we all were working from the Explanatory Memorandum and we were not reading the exact wording. Here is an extract from a post I did on the topic in January 2013.


Here is what the revised Explanatory Memorandum says

[FONT=&quot]Section 106 [/FONT][FONT=&quot]sets out the necessary proportion of creditors required to approve a Personal Insolvency Arrangement. Subsection (1) provides that each of the following is required:[/FONT]

[FONT=&quot](a) a majority of creditors representing not less than 65 per cent in value of the total of the debtor’s debts due to the creditors participating in the meeting and voting must have voted in favour of the proposal,[/FONT]

[FONT=&quot](b) creditors representing more than 50 per cent of the value of the secured debts due to creditors who are entitled to vote and have voted at the meeting as secured creditors must have voted in favour of the proposal, and[/FONT]

[FONT=&quot](c) creditors representing more than 50 per cent by value of the creditors who are entitled to vote and have voted at the meeting as unsecured creditors must have voted in favour of the proposal.[/FONT]

I had not highlighted value in red in the original post.

 

[Bronte]

More of the mess in the Insolvency system from Charlie Weston in the Independant

http://www.independent.ie/business/...pardy-after-fresh-legal-blunder-30492138.html

Legislation so long in the making, Insolvency service so long in setting up, and whistling along nicely at a snails pace.

According to that article, this is the third time there has been a problem with the legislation. All that time for the mandrins to get it right, with an excellent Minister for Justice in Shatter and a total shambles for the people who need it most.

Any of the PIP's who post on here willing to post up the 'confidential' letter they have been sent. Or send it to Burgess so that you won't be identified. Just because the Insolvency service wants to hide the latest scandal doesn't mean they should be allowed get away with it. We do after all supposedly live in a democracy.

 

[Brendan Burgess]

Hi Bronte

Any letter sent to all PIPs is not confidential. The Insolvency Service did not write the legislation. I don't think that the Insolvency Service is trying to hide anything. They are trying to make it work and have notified the Dept of Justice of the many changes which they need to the legislation.

This particular error should not have slipped through. But in general, any groundbreaking legislation like this will need to be amended in the light of experience in the field.

 

[Bronte]

Any letter sent to all PIPs is not confidential. .

Then why are the letters marked confidential?

Why didn't the Insolvency service print it on their website?

Shouldn't legislation be correctly drafted in the first place, isn't that why they have top lawyers in the Dept of Justice. Or why waste all the time and money on that and just copy it from the UK or Australia etc.