Embattled Irish developers could soon start moving to the UK in a bid to take advantage of its bankruptcy rules.
Cork-based developer John Fleming, whose Fleming Group has racked up €1bn (£874m) of debt, has already moved to the country and petitioned Southend county court in Essex for bankruptcy. His action could trigger a wave of similar moves by struggling Irish investors.
One lawyer said: “UK personal insolvency procedures are more flexible and streamlined, less expensive and court-controlled, and afford greater legal rights to bankrupts.”
However, he warned that the practice would not be welcomed by creditors.
“David Drumm, the former chairman of now nationalised Anglo Irish Bank, chose to file for bankruptcy in 2010 in Massachusetts and is now the subject of intense questioning in the Boston courts by his Irish creditors, chief among them Anglo Irish.”
Under British law a person can be discharged from bankruptcy within a year. In Ireland, bankruptcy applies for life unless it is discharged by the court. The court will consider lifting a bankruptcy order only after enough money has been raised through the sale of assets and after a 12-year period.
Sources said Irish developers could use UK bankruptcy as an alternative to Ireland’s National Asset Management Agency. Delays in processing the vast amount of transferred debt to the bad bank is said to be making the practice a more attractive option for borrowers.
- The UK arm of Irish housebuilder McInerney Homes was placed in administration this week. KPMG has been appointed administrator to seven companies in the UK arm, which own 32 development sites across the country. Ten sites will be transferred to one of the group’s solvent companies – Ludgate Hill Developments – with the remainder placed in the hands of the admininistrator. The company owes more than €100m to a number of banks including Bank of Ireland,e_SDHp Anglo Irish and KBC.
James.kenny@estatesgazette.com
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