The news that Cork-based developer John Fleming, whose Fleming Group has racked up €1bn (£874m) of debt, has already moved to the UK and petitioned Southend county court in Essex for bankruptcy has led to muttering that his action could trigger a wave of similar moves by struggling Irish investors.
One lawyer said: "UK personal insolvency procedures are more flexible and streamlined, less expensive and court-controlled, and afford greater legal rights to bankrupts."
However, he warned that the practice would not be welcomed by creditors.
"David Drumm, the former chairman of now nationalised Anglo Irish Bank, chose to file for bankruptcy in 2010 in Massachusetts and is now the subject of intense questioning in the Boston courts by his Irish creditors, chief among them Anglo Irish."
Under British law a person can be discharged from bankruptcy within a year. In Ireland, bankruptcy applies for life unless it is discharged by the court. The court will consider lifting a bankruptcy order only after enough money has been raised through the sale of assets and after a 12-year period.
Sources said Irish developers could use UK bankruptcy as an alternative to Ireland's National Asset Management Agency. Delays in processing the vast amount of transferred debt to the bad bank is said to be making the practice a more attractive option for borrowers.
Photo by rfduck via Flickr.
It appears that bankruptcy law is quite different in the UK than the US. Making that comparison, for thosse that have the choice of where to file, if that is at all possible, is a task in and of itself.