The High Court has dismissed appeals by Leonard O’Hara and Noeleen O’Hara, affirming the Circuit Court’s refusal to confirm their proposed personal insolvency arrangements. The appeals concerned a preliminary legal issue: whether the debtors’ personal insolvency practitioner could use a procedure intended for cases where only one creditor is entitled to vote, after just one of two eligible creditors voted at a creditors’ meeting.
The judgment, delivered by Mr Justice Denis McDonald on 25 February 2019, arose from interlocking applications under section 115A(9) of the Personal Insolvency Act 2012. That section allows a court, subject to statutory conditions, to confirm a proposed arrangement rejected by creditors. One condition generally requires approval by at least one class of creditors; the requirement does not apply where the separate section 111A procedure applies.
In Leonard O’Hara’s case, four creditors were listed in the proposal. Pepper Finance Corporation (Ireland) DAC and A. Browne Limited submitted proofs of debt and were entitled to vote. Avantcard and Finance Ireland Asset Management did not submit proofs and were not entitled to vote. Pepper voted against the proposal by proxy. A. Browne Limited, although entitled to vote, did not return a proxy. The practitioner had convened a meeting under section 106, then argued that section 111A should apply because only one creditor had voted.
The practitioner submitted that a literal reading of the legislation would produce an absurd result and that the court could interpret it under section 5 of the Interpretation Act 2005. Pepper argued that section 111A applies only when a single creditor is entitled to vote, and that the statutory scheme did not allow it to be invoked retrospectively after a meeting had been called under section 106.
Mr Justice McDonald found that the practitioner had not met the legal test for departing from the legislation’s literal meaning. The court accepted that the Acts did not expressly address a meeting where several creditors are entitled to vote but only one casts a vote. However, it was possible that the Oireachtas had deliberately distinguished that situation from a case with only one eligible creditor. The meeting could still serve as a check on whether the proposal had creditor support.
The judge also held that the intended legislative solution, if there was a drafting gap, could not be determined with sufficient certainty. The court therefore ruled that section 111A could not be relied on in these circumstances, and section 115A could not be invoked. It dismissed the appeals and affirmed the Circuit Court order dismissing the practitioner’s applications. The High Court did not confirm either proposed arrangement.