Ireland needs to sort bankruptcy tourism
Published 27/05/2013 | 04:20
In the complex world of finance, another new label has been established. This is 'bankruptcy tourism' whereby businessmen who have been made bankrupt in the Irish Republic are crossing the border to take advantage of the more lenient rules here.
The advantages are considerable for those whose businesses involve large amounts of money. In the Republic the bankruptcy laws impose a 12-year ban before someone can start another business, whereas up here the limit is for one year only.
One southern businessman owing more than £100m simply crossed the border, settled in Fermanagh and is therefore eligible to start trading again after a year.
Technically he, and others like him, are not doing anything wrong. They are taking advantage of European legislation and also the fact that the bankruptcy laws are different in the North and the South.
This unfortunate state of affairs underlines the anomalies which can arise when two different jurisdictions share the same landmass.
People on both sides of the border are aware of fuel smuggling or simply shopping across the border to get themselves a better deal on a range of other items.
However, bankruptcy tourism provides a new twist, and people will wonder about the natural justice or even morality of filing for bankruptcy in the North with which the person concerned has had little or no connection.
The same anomalies could arise if the Defamation Bill being introduced at Westminster is not also applied in Northern Ireland – and it seems that there is little intention to do so, and certainly not in full. In turn this could establish yet another new label, in this case 'libel tourism'.
The authorities on both sides of the border need to look more closely at the current laws on bankruptcy and try to work out a fairer system which will not lead to the glaring anomalies which are currently so obvious.
Twelve years may seem too harsh for the Republic and one year too lenient for Northern Ireland. Surely there is a need to strike a balance to suit both jurisdictions.