Belfast Telegraph

Have celebs turned bankruptcy from badge of shame to smart new trend?

By Thomas McKenna

Calum Best, 50 Cent, Keith Gillespie, Mike Tyson, Kerry Katona, Meatloaf, David James and Chris Eubank. The list reads like a Who's Who of celebrity and sport.

However, these are just a few names on a long list of high profile individuals who have ended up in bankruptcy over the past few years.

A sign of the times perhaps, but has it come to a stage now where bankruptcy is the new fashion, rather than the stigma it used to be?

It is a long time since the draconian 10-year bankruptcy period which existed in the UK back in the 1980s, and now the short 12 months of bankruptcy can prove to be an acceptable solution to what can be a very difficult time for those dealing with debt problems in their lives and the stress that this can bring, regardless of their profession.

The one constant about bankruptcy is that it does not discriminate. In Northern Ireland, many of the largest developers have gone through the process, as well as barristers, solicitors and accountants, something which would have been rare prior to the financial downturn nearly 10 years ago.

Without question, the bankruptcy route can be equally attractive to those living a champagne lifestyle with lemonade income or the average man or woman on the street seeking to remove the negative equity cloud that has burdened them for the past decade.

It has been interesting watching the Republic reform its bankruptcy legislation to bring it more into line with the current UK system. While the relatively new three-year bankruptcy term in the Republic is perhaps less attractive than the UK's year-long term, it is nevertheless a fundamental shift away from the view that bankrupts should be subject to the will of their creditors, well represented by Shylock demanding his "pound of flesh" in Shakespeare's Merchant of Venice as far back as the 17th Century.

But there is now a feeling that the bankruptcy laws now are too lenient, that they have gone beyond fairness to creditors, and positively favour individuals who wish to release the shackles of their debt but walk away with the lifestyle and comforts that they enjoyed prior to bankruptcy.

In some cases this can be true. However, those considering bankruptcy should do so in the knowledge that a Trustee in Bankruptcy, despite all legislative changes, retains the tools that make them one of the most powerful officeholders within the insolvency regime.

While bankruptcy may currently be a useful accessory to some, those who are aiming to divest creditors of assets, which are rightly due to the bankruptcy estate, may find they are not such a dedicated follower of fashion.

Thomas McKenna is a director of Keenan CF's personal insolvency department and a former deputy official receiver for Northern Ireland

Belfast Telegraph

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