Despite failed cases by Brian and Mary Patricia O'Donnell and Séan Quinn, the UK route is back on the agenda for many Irish people

Leicester-based Steve Thatcher is becoming used to visiting Ireland. He will be in Dublin again on January 30th for a day filled with meetings with people wanting to explore the option of declaring bankruptcy in Britain. Many of them will go ahead.

The British route is back in the headlines following the failed bid last month by Brian and Mary Patricia O’Donnell in London, and before them Seán Quinn, but Thatcher bridles at the description of his work as “bankruptcy tourism”.

“I hate the term,” he tells The Irish Times. “That is not what I do. My clients come here and do things properly. I make them fully comply. There are no shortcuts. I do not take people on who will not do it properly.”

Under European Union rules, EU citizens, bar those of Denmark, can declare bankruptcy legally in another member state if they can prove that they have established themselves there and no longer have links with their home country.

The O’Donnells tried and failed, partly because Mr O’Donnell did not reveal the existence of a £120,000 consultancy fee, but also because past paperwork showed that his links with Ireland had continued for longer than he told the court.

After the ruling by the High Court in Belfast against Seán Quinn’s bankruptcy application, Thatcher advised his Irish clients that their creditors – mostly banks – should be told of their move to Britain “three to four weeks” before a petition was lodged.

Now, following the O’Donnells’ ruling, the timetable has become longer. “Now it is two, two and a half months to make sure that we get responses back from the banks,” says Thatcher, speaking over loud lunchtime chatter in the Market Porter pub in London’s Borough Market.

“I won’t be taking people through now, even if they are ready. I’m saying, ‘You’re not going anywhere, you don’t need to rush into it, let’s make sure that we have an acknowledgement from the bank, confirming where you are.’”

It is a delicate balancing act. Debtors must give notice to creditors, but not too much to allow them to take a creditor’s bankruptcy petition against them in an Irish court – an outcome that could see them tied in legal knots for 12 years.

However, Thatcher believes the banks have little interest in stopping the majority of those contemplating bankruptcy in Britain. “I have come to the view that with the smaller cases the banks are simply not going to be taking up court time taking these individuals to court.”

Indeed, he goes further. “It is Ireland exporting its problems again, much like abortion. They won’t deal with it at home, so we’ll deal with it in the UK. Put yourself on a boat and go and sort yourself out,” he declares.

In the beginning came the property developers, such as Fleming Construction’s John Fleming, who left behind €1 billion worth of debt. “ realised that they needed to get out and sort themselves out and they all went quite early.

“I have done two last year at £250m. The year before I did two at £100m and one at £80m,” says Thatcher, who has now combined with Dublin solicitor Anthony Joyce to prepare for Ireland’s upcoming bankruptcy law changes.

“All the stuff coming through now is anything from £150,000 up to £10 million or £11 million – that is really typical of where we are,” he says.

Properties with partners

“Just yesterday a couple went through . They owed about a quarter of a million on their house.

“But they had both lost jobs, two kids under three, so they have relatives over here – the wife does, so they have moved across here, living with parents, going through it. They’ll probably stay. There is nothing for them in Ireland, the property has gone back,” he says.

Younger people who had bought properties together with partners who have since departed the scene are increasingly approaching him.

“Those relationships have come to an end. One has gone and left the other there. They can’t afford the mortgage on one wage, so what do they do?

“There is a house with €300,000/€400,000 of negative equity, no chance of paying that off, barely paying the mortgage, if covering it at all, so it is ‘jingle-mail’ – keys back in the mail – and off to England,” he goes on.

Thatcher sees a rise in the numbers travelling, but not the emergence of “a flood”, but only because most of the 100,000 people with mortgages that are currently in arrears “don’t have the ability to up sticks and head to the UK”.

“A lot of those will be employed in the public sector. I get contacted by people in the public sector all the time, ‘What do we do?’ ‘Do you have good jobs?’ I ask. ‘Yes, paying a combined income of €120,000 into a house, but they’re still not making ends meet. I hear it all the time.”

In some cases, debtors do not want to pay, rather than cannot pay.

“There are a large number of people saying, ‘I want the bank to write off my liability’. When you do the analysis you see they can afford to pay, they just don’t want to.”

Such debtors, he believes, will not be given concessions in a bank write-off scheme – “if it ever comes in, which I doubt” – though, equally, banks are deluding themselves about the impact that Ireland’s changed bankruptcy laws will have, he argues.

Once in force, the changes will ease Irish bankruptcy rules, though 65 per cent of a debtor’s major creditors – by the value of debt, not their number – will have to approve a debt settlement – “an inadequate solution”, in Thatcher’s eyes, that gives “financial institutions the veto”.

Creditors’ agreement is needed in the UK for its system of Individual Voluntary Arrangements to work – a step short off bankruptcy, but Britain has “had 27 years of using this legislation. We understand how it works.

“I am not sure that the Irish banks have any idea of what is going to hit them once this comes onto the statute books and 100,000 people with delinquent mortgages turn to people like me for a debt settlement arrangement,” he declares.

The cultural differences displayed towards bankruptcy in Ireland and Britain have been striking for Thatcher. “Yes, absolutely, there is a difference. It is probably a Catholic approach in Ireland: you got yourself into this, it is your moral responsibility to get yourself out of it.”

In some cases, families met with disaster after selling land held for generations, before investing the proceeds in bank shares or property. Now, they desperately struggle to hold on to the last acre handed down over the years.

“You’d never find that here,” says Thatcher. “Then again, you’d would never encounter the level of debt here. When I got into this I was blown away by the size of the debts. I spent 20 years dealing with credit card and loan debt up to £70,000, maybe the odd repossession of a £250,000 house.

‘Morally corrupt’ banks

“Suddenly I was dealing with nothing less than €20 million or £30 million. Now I do see people at €100,000, but the majority are in for three or four houses that are down the pan,” said the Leicester insolvency expert, who described the Irish boom as “like a feeding frenzy at a carp-pool”.

However, morality works both ways in Thatcher’s eyes, since the State “had no controls in place” to stop “morally corrupt” banks giving people “30 times annual earnings to speculate in things about which they had no financial knowledge”.

Done properly, bankruptcy in the UK will offer some, but not all the opportunity of a fresh start and few petitions will run into delays, let alone any other obstacle, if lodged outside London, or Belfast, where registrars do check paperwork thoroughly, but such happens rarely elsewhere.

However, “fly-by-night” conduct is neither needed, nor smart, he insists. Most people will not be challenged by Irish creditors because they are “too small”, he insists.

“The people coming over here haven’t got assets, they have got debt. That is all they have got.”