Personal Insolvency Act 2012

1 arthur cox FINANCe Group Briefing December 2013 Personal Insolvency Act 2012 An Update This document contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate. This Briefing updates the Briefing published in January 2013 immediately after the signing of the Personal Insolvency Act 2012 (the Act) to take account of subsequent developments. Background The Act was signed into law on 26 December 2012. It introduced reforms to the Bankruptcy Act 1988 (the Bankruptcy Act) in respect of which commencement orders were made on 3 December 2013, and also introduced three forms of nonjudicial debt settlement arrangement (the Arrangements) as alternatives to bankruptcy: Personal Insolvency Arrangements (PIAs), Debt Settlement Arrangements (DSAs) and Debt Relief Notices (DRNs) which allow (subject to certain conditions being met) the writedown or restructuring of secured and/or unsecured debt owed by certain eligible individuals. Debtors have been able to apply for these Arrangements since 9 September 2013. Arrangements: Common Themes There are a number of common themes between the Arrangements as follows: individuals only: each Arrangement is only available in respect of debt incurred by individuals (not corporates) irrespective of whether that debt was incurred for business or personal purposes. eligibility criteria: the debtor must be insolvent (i.e. unable to pay his debts as they fall due) to avail of an Arrangement (and meet other eligibility criteria). A debtor cannot apply for an Arrangement where 25% of the relevant debt was incurred in the preceding 6 months 1. no imminent likelihood of becoming solvent: the debtor must have no likelihood of becoming solvent within the 5 years following his DSA or PIA application (or 3 years in the case of a DRN application). intermediaries: the application must be made through a third party. In the case of DRNs, this is an approved intermediary (AI) and in the case of DSAs and PIAs, a personal insolvency practitioner (PIP). treatment of preferential debts : DSAs and PIAs will generally not affect the debtor s obligation to pay preferential 1 For DRNs, the Companies (Miscellaneous Provisions) Bill 2013 proposes to amend this to instead require that the debtor has not, within the 6 months preceding his DRN application date, arranged his financial affairs primarily with a view to being eligible for a DRN.

2 arthur cox FINANce debts (i.e. rates and income tax) as defined in the Bankruptcy Act. excludable debts : certain excludable debts (largely debts owed to the State) may also be included in an Arrangement with creditor consent. creditor objection/consent: creditors can object to an Arrangement but, in the case of a DRN, an objection may only be lodged during the supervision period once the DRN is in place and creditor consent is not needed other than in respect of the inclusion of excludable debt. one-time solution: a debtor may only avail of each Arrangement once. no appeal: a debtor has no right of appeal against a decision taken at a creditors meeting in respect of a DSA or a PIA. PPR: a debtor cannot be forced to leave a principal private residence (PPR) under a DSA or a PIA, but may opt to do so. Key Points to Note secured creditors: secured debt (including residential and buy-tolet mortgages) up to 3,000,000 (or a higher amount, if all secured creditors agree) can be included in a PIA. While it is unlikely that secured creditors will frequently be compelled to accept a write-down of secured debt, the Act does give debtors a process whereby they can apply for write-downs. That process should be sufficiently robust so as to differentiate between can tpays and won t-pays, but in many cases a write-down may be the only option. The Act does provide certain protections for secured creditors, including a claw-back provision. voting: while a majority of creditors representing 65% in value of the total debt (secured and unsecured) attending and voting at the creditors meeting must vote in favour of a PIA for it to take effect, only 50% in value of attending and voting secured creditors, and 50% in value of attending and voting unsecured creditors, must do so. While concerns were expressed that this could give secured creditors an effective veto (as persons with secured debt tend to concentrate their debt with one institution) where an individual has an equal amount of secured debt with two institutions and also has unsecured debt, all of which is proposed to come within a PIA, it would still be possible for a secured creditor to be squeezed-out by the terms of the PIA being forced upon it if it is approved by the other creditors. Likewise, secured debt includes PPRs and other properties (such as buy-to-lets and commercial investments) and it is therefore possible that the creditor secured on a PPR could be out-voted by other secured creditors. protections: the Act provides significant protections against abuse and contains a number of features to distinguish between can t pays and won t-pays including specific eligibility criteria, and a requirement in the case of a PIA that the debtor has complied with any mortgage arrears process required by the Central Bank of Ireland (the Central Bank) and operated by the relevant secured creditor for at least 6 months. court approval: each Arrangement must be approved by the appropriate court (the Circuit Court for total liabilities up to 2,500,000 and the High Court for total liabilities above that amount) and will take effect when published by the Insolvency Service of Ireland (the ISI) on the appropriate register (the ISI will maintain registers of DRNs, protective certificates, DSAs and PIAs). review: a review by the Minister for Justice and Equality (the Minister) (together with the Minister for Finance) of the operation of the provisions of the Act as regards Arrangements must be started by 31 July 2016. Personal Insolvency Arrangements (PIAs) Summary: A PIA allows for the settlement of secured debt up to 3,000,000, and unsecured debt, over a 6 year period (with a possible 1 year extension) as a possible alternative to bankruptcy. The 3,000,000 cap means that secured business debt could be the subject of a PIA, as many PPR loans will have been for less than that cap amount. If all secured creditors agree, the 3,000,000 cap can be waived. Criteria: An insolvent debtor who meets certain criteria may propose a PIA to one or more secured and unsecured creditors. His proposal must be formulated in conjunction with a PIP. There must be at least one secured creditor (which could include a judgment mortgagee) holding security over an asset or property of the debtor situated in Ireland. Role of PIP: The PIP will, following discussions with the debtor and the completion by the debtor of a prescribedform standard financial statement (SFS), apply to the ISI on the debtor s behalf. The application must be accompanied by a statement that the PIP is of the opinion that the information in the debtor s SFS is correct, the debtor satisfies the eligibility criteria, there is no likelihood of the debtor becoming solvent within the next 5 years and it is appropriate for the debtor to apply for a PIA. That statement must also be accompanied by a statutory declaration from the debtor. Where the proposed PIA relates to PPR mortgage debt, the debtor must confirm in writing that he has cooperated with the secured creditor s Mortgage Arrears Resolution Process under the Central Bank s Code of Conduct on Mortgage Arrears for at least 6 months, following which an alternative repayment arrangement (ARA) was not capable of being agreed, or the secured creditor was not prepared to offer an ARA to the debtor. Role of ISI: The ISI will, if it is satisfied that the application is in order, issue a certificate to that effect and forward the certificate, the application and any supporting documentation to the appropriate court. The court will then decide whether or not to issue a

3 arthur cox FINANce protective certificate (the Protective Certificate) and may hold a hearing if it requires further information or evidence. The Protective Certificate will last for 70 days (with a possible 40 day extension). While the Protective Certificate is in force, certain enforcement proceedings and other actions may not be initiated. Dealing with Creditors: The PIP must then notify the relevant creditors of the issue of the Protective Certificate and the proposed PIA, seek creditor submissions and provide them with certain documents. Debt write-down: Where a PIA includes terms providing for a write-down of secured debt to a specified amount, the terms of the PIA shall (unless the secured creditor agrees otherwise) provide that such written down amount shall rank equally with, and abate in equal proportion to, the unsecured debts covered by the PIA and shall be discharged with those unsecured debts on completion of the obligations specified in the PIA. Terms of a PIA: The Act sets out a nonexhaustive list of repayment options that can be included in a PIA and sets out certain mandatory provisions regarding the treatment of security. Specific provisions are included which are designed to ensure that a minimum amount is payable to secured creditors and that any write-down does not reduce the amount to be paid to the secured creditor on the sale of the property below the lesser of (a) the value of the security or (b) the amount of the debt secured thereby. It also provides for a claw-back if the property is subsequently sold for an amount greater than the writtendown value of the debt it secured, unless agreed otherwise. Value of Security: The value of the security is to be determined by agreement between the debtor, the PIP and the relevant secured creditor. In the absence of agreement, those parties must appoint an independent expert and, where the parties cannot agree on an independent expert, they may refer the issue to the ISI which will then appoint an independent expert whose valuation will be binding. PPR debt: Where a PIA relates to PPR mortgage debt, it should be borne in mind that all secured debt (mortgages over PPRs and buy-to-let properties, and second charges) is treated the same. Judgment mortgages will also be treated as secured debt. This could produce unfair results at PIA creditors meetings in respect of holders of PPR mortgages. Creditors Meetings: For a proposed PIA to be approved at a creditors meeting, it must be approved by: a majority of creditors representing 65% in value of the total of the debtor s debts owed to the creditors participating in, and voting at, the meeting creditors representing > 50% of the value of secured debts owed to creditors participating in, and voting at, the meeting creditors representing > 50% of the value of the unsecured debts owed to creditors participating in, and voting at, the meeting Approval: If the PIA is approved, it must then be sent to the ISI which, in turn, must notify the appropriate court. If no creditor objection is lodged with the appropriate court within 14 days, or if such a creditor objection is not approved by the appropriate court which then approves the PIA, the appropriate court must notify the ISI which will then register the PIA in its Register of PIAs, following which it will come into effect. PIA not agreed: If a PIA is not agreed, the process terminates and the debtor will be open to bankruptcy and other enforcement proceedings. Ongoing obligations, variation and termination: Ongoing obligations are imposed on both the PIP and the debtor for the duration of the PIA, including an obligation on the PIP to ensure that proceeds under the PIA are applied in accordance with its terms and an obligation to review the PIA at least annually. Notably, payments to creditors of the same class will be apportioned on a pari passu basis unless otherwise provided in the PIA. Unless terminated during its term (for example, if a 6 month arrears default occurs), the debtor will be discharged from the unsecured debts specified in the PIA, and secured debts to the extent specified in the PIA, once the PIA reaches its conclusion. Where a PIA terminates prematurely, the debtor will be liable in full for all debts covered by the PIA unless otherwise provided for in the PIA or unless the appropriate court makes an order to the contrary. It is possible for a PIA to be varied with the consent of a debtor, and subject to approval at a creditors meeting. The same approval thresholds apply as with the original approval of the PIA. Debt Settlement Arrangements (DSAs) Summary: A DSA allows for settlement of unsecured debt; secured debt is unaffected. Proposal: A DSA may be proposed by a debtor to one or more creditors in respect of the settlement of unsecured debts. Again, the debtor must be insolvent and meet certain eligibility criteria. Role of PIP: The debtor must provide a written statement of his financial affairs to a PIP following which a meeting between the debtor and the PIP will take place. The debtor will then complete an SFS and the PIP will advise the debtor of his options, and manage the debtor s DSA proposal. The PIP will make the application to the ISI on the debtor s behalf accompanied by a statement that the PIP is of the opinion that the information in the debtor s SFS is correct, that the debtor satisfies the eligibility criteria, that there is no likelihood of the debtor becoming solvent within the next 5 years and that it is appropriate for the debtor to apply for a DSA. The application will also be accompanied by a statutory declaration from the debtor. Role of ISI: The ISI will, if it is satisfied that the application is in order, issue

4 arthur cox FINANce a certificate to that effect and forward the certificate, the application and any supporting documentation to the appropriate court. The court will then decide whether or not to issue the Protective Certificate, and may hold a hearing if it requires further information or evidence. The Protective Certificate will last for 70 days (with a possible 40 day extension). While the Protective Certificate is in force, certain enforcement proceedings and other actions may not be initiated in relation to the debts specified therein. The PIP must then notify the relevant creditors, and invite submissions as to how the debts might be settled. Dealing with Creditors: While secured debt cannot form part of a DSA, the PIP may share information with secured creditors. The PIP must arrange a creditors meeting at which creditors representing 65% in value of the debts due to creditors participating in the meeting must approve the DSA for it to move forward. If approved, the PIP must notify the ISI, which must provide a copy of the DSA to the appropriate court. If approved by the court (and no creditor objection is entered within 14 days or where any creditor objection has been dismissed) the DSA will take effect once registered by the ISI in the Register of DSAs. Terms of a DSA: A DSA may include provisions for the payment of lump sums, the transfer of assets to creditors or the sale of assets. Unless otherwise specified, payments shall be made to creditors who are party to the DSA on a pari passu basis, and provision may also be included for a charge or guarantee to be provided by the debtor or another person. Life of a DSA: A DSA will last for 5 years (with a possible 1 year extension) during which time certain enforcement and other action is stayed. Ongoing obligations are imposed on both the PIP and the debtor for the duration of the DSA and, unless terminated during its term (for example, if a 6 month arrears default occurs), the debtor will be discharged from the debts specified in the DSA once it expires. Debt Relief Notices (DRNs) Summary: A DRN allows a full write-off of qualifying debt up to 20,000 following a 3 year supervision period. Purpose: The DRN procedure is designed to provide debt forgiveness to those debtors with little or no ability to pay off their debts and is available in respect of certain qualifying debts including credit card debt, utility bills and overdrafts. Criteria: In addition to the requirement that the debtor be insolvent and have no likelihood of becoming solvent within 3 years of the application date, the eligibility criteria for a DRN also include the debtor having net disposable income of less than 60 per month, assets or savings worth less than 400 and Irish domicile or ordinary residence. Further, a debtor may not apply for a DRN where, in the 2 years preceding the application date, he has entered into a transaction at an undervalue which has contributed towards his financial difficulties, or he has given a preference to a person that has substantially reduced the amount available to discharge his other debts. A debtor will, however, be allowed to exclude from a DRN certain household items and business-related books, tools and equipment up to 6,000, an item of personal jewellery valued up to 750 and a motor vehicle worth less than 2,000. Role of AI: Applications are managed by an AI who must meet with the debtor, advise as to possible options, assist in the completion of an SFS and make the DRN application on the debtor s behalf to the ISI. Role of ISI: If satisfied that a DRN application is in order, the ISI will issue a certificate to that effect and refer the application and supporting documentation to the appropriate court for approval. If approved by the court (the court has a right to hold a hearing where it requires further information or evidence to enable it to reach its decision) the court will issue the DRN and notify the ISI. The DRN will take effect once registered by the ISI in the Register of DRNs that it will maintain. Life of DRN: A DRN will remain in place for a 3 year supervision period. Where a debtor s income increases by 400 or more per month during the supervision period, he must surrender at least 50% of that increase to the ISI. The debtor may also buy himself out of the DRN by making repayments equivalent to at least 50% in value of the qualifying debt (the balance then being writtenoff). At the end of the 3 year supervision period, the qualifying debts are writtenoff without affecting the rights of the debtor s secured creditors to enforce their security. Treatment of Pensions DRN: a pension will not be counted when calculating the assets and savings threshold of 400 however payments which the debtor is entitled to receive but has not yet received will be regarded as income. DSAs and PIAs: a debtor cannot be required to hand over his pension nor can he be required to draw his pension early. However, the Act does allow a creditor or PIP to apply to the appropriate court for relief where that creditor or PIP believes that excessive contributions to a pension arrangement were made within the 3 years prior to the Protective Certificate being issued with a view to putting funds out of reach of creditors. The ISI The ISI was established under the Act, as of 1 March 2013, as an independent body following the appointment of its director, Lorcan O Connor. It officially opened for business on 9 September 2013, and is responsible for monitoring the operation of Arrangements, considering applications for DRNs, processing applications for Protective Certificates, maintaining registers of Arrangements, providing information to the public, issuing guidance, authorising AIs and authorising, supervising and

5 arthur cox FINANce regulating PIPs. It must prepare and adopt a business plan each year, and submit annual reports to the Minister. The ISI may also seek the assistance of the Central Bank and the Garda Síochána in connection with the performance of its functions. ISI Guidelines and Regulations Guidelines: Under the Act, the ISI was required to issue guidelines as to what constitutes a reasonable standard of living and reasonable living expenses (the Guidelines) following consultation with the Minister, the Minister for Finance and the Minister for Social Protection, and to update the Guidelines at least annually. The Guidelines are intended to facilitate the assessment of a debtor s eligibility for a DRN, must be taken into account when certain mandatory provisions of both DSAs and PIAs are being prepared and may be considered by the Court when deciding whether to make a bankruptcy payment order under the Bankruptcy Act. The ISI is keeping the Guidelines under review, and they are publicly available on its website (www.isi.gov.ie). As of the date of this Briefing, the Guidelines were last updated in June 2013. In preparing the Guidelines, the ISI was required to have regard to Government policy publications on poverty, official statistics and surveys published by the Central Statistics Office, the Consumer Price Index, individual needs and the principle of social inclusion. Regulations: The ISI was empowered under the Act to make a number of regulations relating to the authorisation of AIs and PIPs (see further below) and the operation of Arrangements. Regulations in respect of the operation of the Arrangements made to date include: the information that must be contained in a debtor s written statement as to his financial affairs the forms of SFS to be used by debtors the application fees for DRNs and Protective Certificates the form to be used when applying for a DRN» the forms to be used when applying for a Protective Certificate the additional information to be included in a Schedule of Creditors when applying for a Protective Certificate the conduct of creditors meetings in relation to DSAs and PIAs the information that must be provided to a creditor in respect of excludable debt the information that is to be included in the various registers that the ISI maintains AIs and PIPs AIs: as of 5 December 2013, the ISI had authorised 22 AIs, all of whom are linked to MABS (the Money Advice and Budgeting Service). Regulations made by the ISI to date in relation to AIs deal with the qualification criteria and authorisation requirements that must be met by an applicant for an AI authorisation. An AI is not permitted to charge the debtor for its services, although a fee of 100 is payable by a DRN applicant directly to the ISI. PIPs: As of 5 December 2013, the ISI had authorised 89 PIPs. The Act itself sets out general provisions in relation to PIPs, including provisions regarding record-keeping obligations and the obligation to hold professional indemnity insurance. The ISI has also made a number of regulations in relation to PIPs, which expand on the provisions of the Act and also deal with the qualification criteria and authorisation requirements that PIP applicants must meet, the fees payable for authorisation and renewal of PIP authorisations and the manner in which accounts and records are to be preserved. The fees of a PIP will form part of the DSA or PIA on which the creditors must vote (rather than being paid at separately by the debtor to the PIP) and a separate fee is payable by each debtor to the ISI when the Protective Certificate application is made ( 250 in the case of a DSA and 500 in the case of a PIA). Complaints Panel The Act provides for the establishment of a Complaints Committee by the ISI and the appointment of inspectors to investigate those complaints. In September 2013, the Minister sought expressions of interest from persons with relevant experience or special knowledge for inclusion on a panel from which the Complaints Committee may from time to time be appointed. Inspectors will have wide-ranging powers and will be able to apply to the District Court for search warrants. The Act contemplates two types of sanction for PIPs: major sanctions: for example, revocation of authorisation, suspension of authorisation, prohibition from future authorisation, a fine of up to 30,000 or a combination of the foregoing; and minor sanctions: for example, an advice, a caution, a warning, a reprimand or a combination of the foregoing. Specialist Judges of the Circuit Court Part 6 of the Act established a new role - that of a specialist judge of the Circuit Court, for the purposes of performing and exercising the functions, powers and jurisdiction conferred on the Circuit Court by the Act. The Government nominated six county registrars to those roles on 11 June 2013. Bankruptcy The main changes which the Act has made to the Irish bankruptcy regime, by way of amendment to the Bankruptcy Act, are as follows:»» act of bankruptcy : the scope of an act of bankruptcy has been widened

6 arthur cox FINANce to include an individual being subject to a DSA or PIA which has failed or has been terminated. bankruptcy summons: for a creditor to petition for a bankruptcy summons, the minimum amount that must be owed has been increased to 20,000 and the advance notice period which the creditor must give the debtor to pay the debt before the creditor applies for a bankruptcy summons has been increased from 4 days to 14 days. creditor bankruptcy petition: for a creditor to petition for a debtor to be adjudicated bankrupt, the minimum amount that must be owed has also been increased to 20,000 and, before adjudicating a debtor bankrupt, the Court must first consider whether a DSA or PIA would be a more appropriate solution. debtor bankruptcy petition: where the petition to be adjudicated bankrupt is presented by a debtor, the debtor must provide a sworn affidavit that he has made reasonable efforts to reach an arrangement with his creditors by proposing a DSA or a PIA and show that his debts exceed his assets by at least 20,000. Before adjudicating a debtor bankrupt on his petition, the court must be satisfied that he is unable to meet his engagements with creditors and that the matter could not be more appropriately dealt with by way of a DSA or PIA. relevant pension arrangements : certain payments to which the debtor may become entitled under a relevant pension arrangement (which includes PRSAs and retirement benefit schemes) shall not, subject to certain conditions, vest in the Official Assignee however this exclusion will not apply to payments already received by the debtor or payments that the debtor can exercise an option to receive within 5 years of being adjudicated as bankrupt. excessive pension contributions: the Official Assignee can apply to the Court for an order, if he views contributions made by a debtor within the 3 years prior to the bankruptcy adjudication to a relevant pension arrangement as having been excessive, having worsened the debtor s solvency position and having substantially reduced the sum available to creditors, vesting those excessive contributions instead in the Official Assignee. look-back periods: certain hardening periods regarding fraudulent preference and avoidance of certain transactions have been extended from 1 year to 3 years. automatic discharge period reduced: the automatic discharge period has been reduced from 12 years to 3 years. existing bankrupts: where a debtor was adjudicated bankrupt more than 3 years before 3 December 2013 (the date that the bankruptcy reforms commenced), he shall be discharged 6 months later (subject to the rights of creditors to raise objections). suspension of discharge: the Court may (on the application of the Official Assignee, the trustee in bankruptcy or a creditor) suspend a bankrupt s automatic discharge up to the eighth anniversary of the debtor being adjudicated bankrupt. bankruptcy payment order: before a debtor is discharged from bankruptcy, the Official Assignee or the trustee in bankruptcy may seek a bankruptcy payment order from the Court requiring the bankrupt, for up to 5 years, to make payments to the Official Assignee or the trustee in bankruptcy from his income or other assets for the benefit of his creditors accordingly, an individual may remain subject to a bankruptcy payment order even after he has been discharged from bankruptcy. ongoing cooperation: once a debtor is discharged from bankruptcy, he will remain under a duty to cooperate with the Official Assignee in the realisation and distribution of such property as is vested in the Official Assignee. The Office of the Official Assignee in Bankruptcy has now been integrated with the ISI (it had previously been integrated with the Courts Service) and regulations were also made on 3 December 2013 regarding the fees payable to the ISI in respect of the performance of the Official Assignee s functions, and the accounts to be maintained by the Official Assignee. The Companies (Miscellaneous Provisions) Bill 2013, currently proceeding through the Houses of the Oireachtas, will make further changes to the Bankruptcy Act whereby notices of adjudication may be published on the ISI s website instead of in a daily newspaper circulating in the area in which the debtor resides, with a view to making publication of notices less expensive for debtors. In each case, the notice must also continue to be published in Iris Oifigiuil. It is also proposed to amend the requirement in relation to the type of daily newspaper; currently, it must be a daily newspaper circulating in the area in which the debtor resides but the Companies (Miscellaneous Provisions) Bill 2013 proposes to change this to a daily newspaper circulating in the State. Amendments to the Act The Act has been amended by the Finance Act 2013, the Court and Civil Law (Miscellaneous Provisions) Act 2013 and the Land and Conveyancing Law Reform Act 2013 as follows: Finance Act 2013: section 100 of the Finance Act 2013 clarified the tax treatment of various events that can arise in the context of Arrangements, including that a transfer of assets by a debtor to a PIP to hold in trust for the benefit of creditors will not attract a liability to capital gains tax and that any benefit arising on a debt write-down under an Arrangement will not be a gift or inheritance for capital acquisitions tax purposes. It also required that a DSA or PIA make provision for the payment of all tax liabilities incurred by a debtor during the course of that Arrangement.»» Courts and Civil Law (Miscellaneous Provisions) Act 2013: this incorporated provisions into the Act clarifying when information is

7 arthur cox FINANce to be removed from the Registers maintained by the ISI following termination of an Arrangement, expanding the provisions dealing with the variation of DSAs and PIAs and incorporating additional detail as to the manner in which a PIPs appointment may be terminated. Land and Conveyancing Law Reform Act 2013: this, in addition to introducing a legislative fix for the issues arising out of the 2011 High Court decision in Start Mortgages v Gunn [2011] IEHC 275, introduced a further provision relating to proceedings brought by a secured creditor seeking an order for possession over a PPR. It provides that the Court may, of its own motion or on the application of a party to the proceedings who would be entitled under the Act to propose a PIA to his creditors, adjourn the proceedings for up to 2 months to enable that person to consult with a PIP and, where appropriate, instruct that PIP to propose a PIA to his creditors. If, at the end of the 2 month period, the Court considers that significant progress has been made in the preparation of a PIA proposal, it can grant a further adjournment. Other Developments As of the date of this Briefing, media coverage indicates that two Protective Certificates having been issued (one in respect of a DSA (with the creditors meeting also having been held) and one in respect of a PIA). As part of the Mortgage Arrears Resolution Targets set for certain lenders by the Central Bank in March 2013 (and updated in September and December 2013) (see our March 2013 Briefing here) the appointment by a borrower of a PIP for the purposes of considering a PIA constitutes a proposed sustainable solution and the putting in place of a PIA will constitute a concluded sustainable solution. When the affected lenders disclose the manner in which their targets in respect of proposed and concluded sustainable solutions,have been met at the end of each quarter, that will provide further clarity as to the number of debtors appointing PIPs in an attempt to agree a PIA with their creditors. In November 2013, AIB and the Irish Mortgage Holders Organisation announced an initiative designed to give borrowers in mortgage arrears to the AIB Group (AIB, EBS and Haven) access to an independent third party who will act as a facilitator, and liaise with AIB on their behalf with a view to reaching a sustainable solution. The initiative was scheduled to begin on 18 November 2013 and it remains to be seen how this will impact the numbers applying for Protective Certificates with a view to agreeing a PIA. The ISI has indicated that it intends to provide quarterly statistics as to the number of applications received once a meaningful number of applications have been processed. It has confirmed that, by the end of November 2013, it had received 6,510 telephone calls and 1,731 emails to its offices. The anticipated numbers for the first full year of the Act s operation set out by the Minister to Seanad Eireann on 21 November 2012 (based on experiences under similar legislation in the United Kingdom and in Northern Ireland) were 15,000 applications for the two main Arrangements: DSAs and PIAs, 3,000-4,000 applications for DRNs and 3,000 bankruptcy applications. It remains to be seen in Q4 2014, once the ISI and the bankruptcy reforms have been operational for a full year, whether those anticipated levels of applications will materialise.

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