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MoneyTimes, August 27

Posted by Jill Kerby on August 27 2013 @ 09:00

INSOLVENCY PIPS MAY CHERRY PICK DEBTORS WHO CAN “BRING SOMETHING TO THE TABLE” The first insolvency practitioners are now taking on clients. For the tens of thousands of people who desperately need their assistance, the job of finding one to take on their case may not be easy. The 14 registered Personal Insolvency Practitioners (PIPs) on the official Insolvency Service of Ireland’s website, www.isi.gov.ie represent 10 firms of accountants, solicitors and financial advisers and are located in six counties – Clare, Dublin, Limerick, Louth, Meath, Tipperary and Waterford. The majority are accountants and insolvency practitioners, one is a legal practise and one is a financial adviser. More names will be added to the register shortly. While each of the successful PIPs has fulfilled the ISI’s required minimum level of financial/insolvency experience, training and insurance, the range of skills, experience and resources per firm vary hugely. How they each intend to charge for services that include applying for the 70 day debt protection notice, meeting with creditors, preparing a successful insolvency application, arranging the collection and payment of the agreed monthly payment to creditors for the duration of the Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA) which can last for five or six years (and a year longer in some cases) is not clear-cut. PIP must also supervise the debtor’s ‘Reasonable Standard of Living’ income arrangement and even adjust it (and pay creditors their share) should the client receive any additional income, bonuses, inheritances, etc during their insolvency period. Friel Stafford and Grant Thornton are two of the largest, mainly corporate insolvency practitioners in the state. Grant Thornton is the biggest personal insolvency firm in the UK. They are expected to process large numbers of personal insolvency cases and have systems – and sufficient administrative staff - already in place to process the applications more quickly than small practises. The other practitioners on the ISI list, are much smaller firms, but we asked them all about their remuneration, specifically about initial fees or payments. From the outset, said some of the PIPs, debtors need to realise that the client/PIP relationship is entirely private, and it is the client, not the ISI that pays the PIP for their work. Many PIPs expect their total fee, per typical case, to amount to about €5,000 though it could be higher depending on the size of the insolvency. Some will charge a first meeting consultancy fee. This fee is paid even before the €250 and €500 respective fee to the ISI for a DSA and PIA protection notice certificate is paid that must be paid directly to the ISI if the case is accepted by the PIP. Some then expect to receive either an upfront cash or front-loaded payment (in the first year of the arrangement) that is agreed to by the other creditors. A few stated that they would accept an equal share of the debtor’s repayment pool over the agreed period of the insolvency. The following listed practitioners are waiving, for an introductory period at least, any initial consultancy fee: they include Grant Thornton in Dublin; Forest & Co in Dunshaughlin, Co Meath and ACO Business & Financial Solutions in Trim, Co Meath; Gloman Consulting in Limerick City; Kirk and Associates, Dundalk, Co Louth and Hogan and Co in Ennis, Co Clare. Initial meetings are expected to last up to two hours, and the majority said they would be reviewing their fee policy depending on how many clients fail to show up for those scheduled first meetings. Five of the insolvency practises are charging an initial fee: Mitchell O’Brien of the Insolvency Resolution Service in Dungarvan, Co Waterford charges €150 plus VAT fee for the first meeting, deductible against his total remuneration if the application is successful. Friel Stafford in Dublin and Hibernian Insolvency Solutions, in Clonmel, Co Tipperary will both charge a non-deductible €300 plus VAT for the initial consultation. John Lynch of Lynch Solicitors in Clonmel will be charging a non-deductible €250 plus VAT for the initial consultation. So far, just Grant Thornton in Dublin, Hogan and Co in Ennis, The Insolvency Resolution Service in Dungarvan and Gloman Consulting in Limerick have said they will be paid from the general creditor’s pool. The others are still considering how they will arrange their remuneration: two “may look” for c€1,000 upfront; the others said it is too soon to determine how every case payment will be arranged. There was some consensus however about who is most likely to succeed in a debt settlement or personal insolvency arrangement: it will be the person who has access to cash, or a saleable asset “to put on the table to their creditors.” People with only their income to offer, or worse yet, no income, if they are social welfare beneficiaries, may not only have difficulty finding a PIP to take their case, they said, but may have to consider the option of bankruptcy.

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