Shatter asks Britain to crack down on light-touch ‘bankruptcy tourism’

Pressure to crackdown on “bankruptcy tourism” is being applied to the British government by Justice Minister Alan Shatter.

Mr Shatter is alarmed at the number of Irish people seeking protection under Britain’s much more light-touch insolvency system.

The issue was raised at a meeting of EU justice ministers and Mr Shatter has lobbied the British government and senior Brussels figures for a more co-ordinated policy.

After a spate of high-profile bankruptcies of Irish people in Britain, such as former minister and radio host Ivan Yates and Westlife star Shane Filan, Mr Shatter wants London to toughen its stance.

Ireland wants reform of the centre of main interests aspect of British bankruptcy law, which allows people to file for insolvency there after living in the country for six months.

Debtors are free from bankruptcy after a year in Britain, while in Ireland it takes 12 years. Even under new insolvency laws, bankrupts will not be discharged in Ireland for three years, and in some cases that period can be extended to eight years.

A number of Irish developers have filed for bankruptcy in Britain to get better terms. These include Bernard McNamara, whose debt total stood at €1.5bn.

With the new insolvency laws set to become operational here within weeks, Mr Shatter has been criticised for allowing creditors such as bankers too much influence over the process.

Critics argue that not enough protection has been given to people in debts, such as mortgage debt, and influence will remain with the banks and other credit organisations, leaving Britain an attractive destination for would-be bankrupts.

Mr Shatter says he wants a pan-European solution to the problem, to end what he describes as “bankruptcy tourism”.

It is believed more than 500 Irish people a year are being declared bankrupt in Britain and the North.