The High Court dismissed an appeal by a debtor seeking approval of a proposed personal insolvency arrangement, finding that the available information did not establish that it was sustainable or that all of her means had been brought into account.
The appeal followed a Circuit Court refusal to approve the arrangement after objections by Allied Irish Banks plc and EBS DAC. The proposal had been rejected at a creditors’ meeting in April 2016. The High Court judgment, delivered by Ms Justice Baker on 29 November 2017, considered whether a creditor class had supported the proposal and whether the arrangement met statutory requirements.
The court held that creditors whose loans were secured on the debtor’s principal private residence could form a separate class for the purposes of the review. It rejected the argument that Lisduggan Credit Union should be a separate class merely because it was a mutual lender. Instead, it grouped Lisduggan and KBC Bank Ireland plc, which held security over other properties, as a class of secured creditors distinct from EBS, which held security over the principal residence. That class had voted in favour, meeting the statutory threshold.
But the court found problems with the proposed treatment of a second residential property, where the debtor’s parents lived without paying rent. The debtor’s practitioner argued that her parents’ childcare and work for the business helped reduce household costs. The judge said the evidence did not clearly establish the true costs of retaining the property or whether the arrangement was financially sustainable. The parents had not filed affidavits, and the judgment noted that no written agreements concerning their occupation had been produced.
The court also questioned whether the debtor’s business could provide the income needed to meet the proposal. The trade had moved from a company in liquidation to a new company, whose evidence showed a profit of just over €20,000 in a seven-month period. The judgment said the figures did not support the annual income required under the arrangement, and the court had no updated business evidence for the appeal.
The judge concluded that too many uncertainties remained to find the arrangement genuinely sustainable. She also found that the debtor’s means had not all been brought into account and that retaining the property occupied by her parents would burden income and unfairly prejudice the objecting creditors. The court dismissed the appeal; it did not approve the proposed arrangement.