Tsunami of bankruptcy cases may overwhelm Irish agriculture later this year
A leading barrister has claimed that large numbers of bankruptcy claims will be made by Ireland’s financial institutions as soon as the courts are allowed to resume ‘normal service’.
And according to Keith Farry, Irish farmers will be in the eye of the storm.
Farry spoke at a recent seminar on farm debt and personal insolvency, hosted by the Irish Creamery and Milk Suppliers’ Association (ICMSA). He explained:
“Once the Covid-19 restrictions have been lifted, there is every prospect of the banks and other financial institutions moving to take legal action against account holders who are not repaying loans and a significant number of farmers will be caught up in this push.
“Under such circumstances, farmers must immediately seek all the professional help they can access. Solicitors and accountants will play an important role in this regard. But the person playing the most important role will be a Personal Insolvency Practitioner or (PIP),” Farry continued.
Only a PIP can go before a court and secure a Protective Certificate on behalf of a client.
Gary Digney, a director of Chartered Accountants PKF-FPM, also spoke at the event. He agreed that a PIP must be appointed as soon as the threat of bankruptcy arises. He said:
“A Protective Certificate gives the debtor immediate court protection from all creditors. It also provides the PIP with the opportunity to draw up a Personal Insolvency Arrangement, or PIA.
A PIA can be discussed directly with creditors or it can be taken to court. The PIA provides the means by which people can get themselves out of debt.
“If creditors do not initially accept the principles of the PIA that has been drawn up, a judge can force the matter in the debtor’s favour, courtesy of a decision taken in court.”
Hope for farmers
According to Digney, farmers in debt should still be able to retain their farms, provided they appoint a PIP as quickly as possible and then move to have a PIA drawn up.
“A PIA can act to extend repayment periods by up 20 years, where secured debt is concerned. In the case of unsecured debt, the time line is six years,” he said.
“Going down this road does not make a farmer insolvent. In fact, the process works to take a farmer out of insolvency.”
“The PIP can then work with the farmer’s accountant and solicitor to ensure that the best possible PIA is put in front of the court,” he concluded.