Bankruptcy process: Court appointee could take part of Mick Wallace’s salary

Mick Wallace, having been made bankrupt, will have to hand over all his property to an official assignee appointed by the court, who will then use the assets to raise cash to repay creditors.

The Independents4Change TD’s total debts come to €30 million. He owes €2 million to Cerberus, the US vulture fund which had him declared bankrupt on foot of a judgment against him over the sum.

According to Wallace, the only asset left to the US firm will be Wallace’s Taverna, one of the restaurants that formed part of the Italian quarter that his company built on Dublin’s Ormond Quay .

At the height of the investment bubble, Wallace’s business had 40 properties, including apartments and the Italian quarter complex.

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However, he said on Monday that the banks sold the other 39, leaving just the Taverna.

Wallace is also a shareholder in two companies: Wallace Taverns, which he said has no value itself, and Wallace Construction, which Cerberus wants to liquidate.

Reasonable expenses

It is open to the assignee to take part of Wallace’s annual €87,258 TDs salary. However, like any bankrupt, he must first be allowed reasonable living expenses to cover himself and any dependants, along with a sum equal to the normal monthly rent where he is living. Whatever is left goes to creditors.

The picture with his family home is more complicated. The basic position with secured creditors such as mortgage lenders is that once the bankrupt hands back the keys to the property and walks away, there is no further obligation.

However, it is possible to strike a deal with banks, if they are willing to accept the sum allocated for rent as repayment for the mortgage, which happens in many cases.

Following Monday’s court hearing, Wallace conceded that the home was the only property that he wanted to keep, but that he has yet to go through the full implications of the bankruptcy.

“I don’t know what’s going to happen to it,” he said.