Bankrupt Cork developer is set for Nama litmus test
The National Asset Management Agency (Nama) has hired asset recovery experts to investigate whether it can take control of some or all of the multi-million pension pot of a Cork developer who went bust last year with company debts of €1bn (£0.8bn) in what will be a landmark case.
Nama is understood to have appointed Louise Brittain, a partner in Deloitte, who specialises in asset recovery, to review John Fleming's pension to determine if creditors are entitled to it in what is likely to be a test case.
Mr Fleming was discharged from bankruptcy last November after effectively proving he was entitled to avail of Britain's more lenient bankruptcy laws than Ireland's.
In March Nama applied in the British courts for an income purchase order against Mr Fleming in a bid to take any income he earns over the next three years above what he needs to live day-to-day.
The move to clamp down on both Fleming's pension and his future earnings is seen as part of a broader move by Nama to prevent developers going abroad to go bankrupt.
Steve Thatcher of IrishBankruptcyUK.ie, a service set up to advise Irish people on going bust in Britain, said: "One of the main benefits of going bankrupt in the UK is the protection of pensions.
"This is an important issue that a lot of Irish bankrupts to the UK often misunderstand when they wrongly assume that UK insolvency legislation also protects Irish pensions - it does not.
"It only applies to pensions that are registered with the UK revenue, which Irish pensions are not.
"In order to avoid creditors attempting to claim a bankrupt's pension, they need to transfer their Irish pension fund to an approved UK pension scheme, before they go bankrupt, when they are setting up their Centre Of Main Interests in the UK, ie when they move to the UK," he added.
Britain is a popular destination for Irish developers who owe money to Nama and overseas banks. In the last year, Ray Grehan, a Galway developer, went bankrupt there after he was ordered to repay the State property agency €300m (£245m), and Priory Hall builders Larry O'Mahony and Tommy McFeely also went bust there.
A raft of other well-known business and developer names have relocated to the UK in a move which could be a step towards going bankrupt there.
But a move by Co Fermanagh man Sean Quinn to go bankrupt in Belfast was successfully challenged by Anglo Irish, with the result that he was declared bankrupt in Dublin where a harsher bankruptcy regime is used.