The High Court adjudicated a Kinsale man bankrupt on his own petition after a proposed Personal Insolvency Arrangement (PIA) was rejected by Ulster Bank, his secured creditor. The court said it had no role in deciding whether the bank’s refusal was reasonable and made no finding that it had acted unreasonably.
The judgment, delivered by Ms Justice Costello on 27 March 2015, concerned a petition under section 15 of the Bankruptcy Act 1988. The petitioner said he could not meet his debts and had first tried to reach an arrangement with creditors. A PIA proposal was considered at a creditors’ meeting on 3 November 2014, where Ulster Bank voted against it.
The proposal would have reduced the mortgage balance from €367,165.33 to €230,000, with estimated monthly repayments of €1,358.58. It also proposed nominal payments of €100 to unsecured creditors. The petitioner’s papers put his unsecured debts at €27,786.95 and estimated the home’s value at €120,000, with €108,000 expected to be realised on sale. The bank had offered reduced payments for five years, but the petitioner’s stated priority was to return to solvency rather than remain in his home.
The petitioner argued that the court should consider whether a creditor had unreasonably rejected a PIA when deciding whether bankruptcy was appropriate. Justice Costello rejected that argument. She said the legislation gave creditors the choice to accept or reject a proposal and did not empower the court to decide whether a PIA should have been accepted.
The judge also concluded that the petitioner could not present a second PIA at that stage, so his inability to pay could not more appropriately be dealt with through another PIA. She said an adjournment to allow him to enter one therefore did not arise.
The court expressly made no determination about whether Ulster Bank’s conduct was unreasonable. Justice Costello said she had decided the case as a matter of law and was proceeding on the assumption, for the purpose of addressing the argument, that the petitioner was right. She added that the judgment did not endorse his criticisms of the bank, which was entitled to have regard to its legitimate commercial interests.
Having accepted that the statutory requirements had been met and that the petitioner wanted the order, the court found it appropriate to grant the petition and adjudicated him bankrupt.