Bankruptcy in the Republic of Ireland

Bankruptcy in Irish Law is a legal process, supervised by the High Court whereby the assets of a personal debtor are realised and distributed amongst his or her creditors in cases where the debtor is unable or unwilling to pay his debts.

Bankruptcy in Ireland applies only to natural persons. Other insolvency processes including liquidation and examinership are used to deal with corporate insolvency.

A bankrupt is somebody who has been adjudicated bankrupt by the High Court. Once a debtor is adjudicated bankrupt, bankruptcy law provides for the mandatory vesting of all of the bankrupt's assets and property in the Official Assignee (OA). Under the supervision of the Court, the OA will realise the bankrupt's assets and distribute the assets according to law among the bankrupt's creditors.

The essence of bankruptcy is that the debtor's assets are transferred to an official who administers and realises them for the benefit of all creditors. The purpose is to release the bankrupt from an unsustainable debt burden and to distribute his assets amongst all creditors equally (although certain types of creditor enjoy priorities). The bankrupt person is subject to restrictions and disabilities on trading and on obtaining credit while a bankrupt but leaves the process with their debts forgiven.

The Official Assignee in bankruptcy can challenge and set aside pre-bankruptcy transactions by the bankrupt to make the assets, the subject of those transactions, available to the creditors.

The classic definition of bankruptcy is that: "it is a law for the benefit and relief of creditors and their debtors, in cases in which the latter are unable or unwilling to pay their debts."

Irish bankruptcy law has been the subject of significant recent comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011 has started this process and the government has committed to further reform.

While bankruptcy is commonly considered to arise where a person is insolvent,in Ireland a person can be adjudicated bankrupt where he has committed any act of bankruptcy

An act of bankruptcy is defined as:

"an act of default, voluntary or involuntary, committed by a debtor, which is either evidence of intent to deprive creditors of their rights through fraudulent assignment or is an implication of insolvency."

The following situations are considered to be acts of bankruptcy pursuant to section 7 of the Bankruptcy Act 1988:

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