A leading expert on bankruptcy law in Ireland has said that the introduction of an automatic unconditional discharge of a bankruptcy after 20 years is still too long.

Bill Holohan, co-author of Bankruptcy Law & Practice in Ireland, said that the move was welcome, in principle, but "certainly exceeds the period recommended by the Labour Relations Commission and the EU Commission".

Holohan also pointed out that the legislation preserves the possibility that a bankrupt, coming into property 19 years after his or her adjudication, might find any property he acquires or inherits being claimed by the Official Assignee. However "a non bankrupt debtor would find claims against him or her in respect of their judgement debts statute barred after a period of 12 years. This inequality of treatment may be open to constitutional challenge."

Nearly 330 bankrupts would be discharged under the 20-year rule if it is introduced.

Holohan said it was undeniable that bankruptcy "is still viewed as an ignominious form of shameful legal limbo".

However, he pointed out that "the EU has taken the view that business closure and bankruptcy, and re-entry to the business world by bankrupts, are something which is natural and are not a synonym for fraud, even if a very small number of bankruptcies would appear to involve an element of fraud. However, the general public perception of bankruptcy in Ireland is of it as a quasi-criminal affair rather than a rehabilitation process to allow entrepreneurs to re-enter the business world, having learned the lessons of failure first time round."

The new rules are contained in the Civil Law Miscellaneous Provisions Bill 2010 which was published on 30 August and provides for limited proposals for amendments to the Bankruptcy Acts. Section 21 proposes a reduction in the conditional discharge period from 12 years to six years and to provide for automatic discharge of bankruptcies existing for 20 years or more.