'Debt for equity' swaps can't be approved without creditor's consent, judge finds

The High Court has ruled that debt-for-equity swaps cannot be approved within personal insolvency arrangements without the explicit consent of the relevant secured creditor. Mr Justice Denis McDonald delivered the judgment in dismissing an appeal brought by a Sligo woman against a Circuit Court refusal to approve her Personal Insolvency Arrangement. The applicant had proposed offering her bank over 43 per cent equity in her family home as part of a debt restructuring proposal, which the bank rejected. The judge found no provisions within the 2012 to 2015 Personal Insolvency Acts permit court approval of such swaps without creditor consent. The case is considered significant within personal insolvency law, with approximately 100 similar cases pending before the courts. Mr Justice McDonald indicated that legislative amendments would be required if arrangements of this nature are to proceed without creditor agreement, stating such changes are a matter for the Oireachtas.