The Supreme Court has ruled that a creditor who did not prove his debt when asked could still object to a Personal Insolvency Arrangement (PIA). The Court allowed Michael O’Flynn’s appeal and said the case should return for consideration of his applications to prove the debt and object to the arrangement.
The appeal concerned a €2.2 million personal guarantee linked to borrowing by Ezeon Entertainment Limited, which operated The Silly Goose pub in Cork City. John O’Driscoll had guaranteed the borrowing. The guarantee had not been called in when O’Driscoll sought a PIA, so his prescribed financial statement listed it as a contingent liability of €1. O’Flynn was asked to prove his debt but did not do so before the creditors’ meeting.
O’Flynn had raised concerns with the personal insolvency practitioner (PIP), including allegations that O’Driscoll was not insolvent and had not fully disclosed assets. Those claims were not determined in this appeal. The PIA was approved at a creditors’ meeting in January 2022. The Circuit Court rejected O’Flynn’s objection and motion, holding that he lacked standing because he had not proved his debt. The High Court dismissed his appeal on the same basis.
In a judgment delivered on 30 November 2023, Justice Elizabeth Dunne said the Personal Insolvency Act expressly barred a creditor who had not proved a requested debt from voting at the creditors’ meeting or sharing in a distribution. It did not expressly bar that creditor from lodging an objection. The judgment also noted that a creditor whose specified debt is covered by a PIA remains bound by it, including restrictions on pursuing recovery.
Justice Dunne concluded that O’Flynn had standing to lodge an objection and be heard. She also said a court could allow a creditor to prove a debt after the deadline set by the PIP. She criticised the PIP’s refusal to grant an extension in the circumstances, but said that issue did not decide the appeal.
The Supreme Court did not rule on whether O’Flynn’s allegations justified refusing the PIA. It allowed the appeal and said the matter should be remitted for further consideration of his entitlement to prove the debt and lodge an objection. The judgment does not record a final decision on those matters or on the PIA’s ultimate status.