The High Court has overturned a Circuit Court refusal and confirmed a six-year personal insolvency arrangement for a Tipperary homeowner, restructuring her mortgage and providing for payments to Revenue and other creditors.
In a judgment delivered on 11 August 2022, Mr Justice Mark Sanfey allowed the debtor’s appeal under section 115A(9) of the Personal Insolvency Acts. He set aside the Circuit Court order made on 2 June 2021 and confirmed the arrangement according to its terms. The ruling approved the arrangement; it did not determine any separate possession application.
The proposed arrangement covered a mortgage balance of about €300,140 on a home valued at €120,000, leaving negative equity of about €180,140. It reduced the mortgage balance to the home’s market value, fixed interest at 3% for the restructured term of 23 years and set monthly mortgage payments at €602.42. The arrangement runs for 72 months. It also provides for Revenue’s preferential debt to be paid in full during years three and four, while unsecured creditors were projected to receive a 2.2% dividend, compared with 0.1% in bankruptcy.
The objecting creditor argued that Revenue’s tax debt was an excludable debt that could not be included without consent, that no qualifying creditor class had approved the arrangement, and that the debtor had failed to make payments in the two years before a protective certificate issued. It later withdrew another objection.
The judge accepted the personal insolvency practitioner’s evidence that Revenue had consented before the creditors’ meeting, despite the absence of written confirmation at that time. Revenue’s email confirming it was satisfied to opt in was sent on 22 October 2020, nearly a year after the meeting. The judge found the email’s wording did not establish that consent began only on that date. He also held that Revenue was deemed to have consented under the statutory process. He described the conclusion as arising from the unusual facts of this case.
The creditor class relied on was Bank of Ireland, owed €2,597.71, less than 1% of the total debt. The judge found it could count as a class: the debt was genuine, significant to the debtor’s means, and the bank was forgoing future interest and charges. He also considered that the arrangement was likely to produce a marginally better outcome for creditors than bankruptcy.
The debtor had made no mortgage payments from April 2017 to September 2018, but then made regular weekly payments, increasing them from €135 to €145. The judge said her explanation for the earlier gap was light on detail, but considered her engagement with debt advice and the practitioner, and her consistent payments thereafter. He found her payment history did not prevent approval.