The Court of Appeal has refused James Flynn’s appeal against an order substituting Everyday Finance DAC for Allied Irish Banks plc (AIB) as petitioner in bankruptcy proceedings. It held that a court rule permits substitution when a debt is transferred after proceedings begin. The decision did not adjudicate Flynn bankrupt or determine whether Everyday can satisfy all requirements at the eventual petition hearing.
AIB obtained a €2.5 million judgment against Flynn in 2016 on his personal guarantee of Fortberry Limited’s liabilities. After the judgment remained unpaid, AIB served a bankruptcy summons in August 2017. Flynn did not pay within the 14 days allowed and did not challenge the summons. AIB presented a bankruptcy petition that November.
AIB and Everyday later said they transferred the relevant loans, judgment debt and related interests to Everyday. In separate personal insolvency proceedings, Flynn acknowledged Everyday as AIB’s successor and as a creditor. The High Court dismissed his application to have a proposed personal insolvency arrangement take effect despite creditor opposition. It found that Everyday was owed €2,603,054.84 and that a solicitor’s debt did not qualify as a separate creditor class.
Everyday then applied under Order 17, rule 4 of the Rules of the Superior Courts to replace AIB in the bankruptcy petition. The High Court granted the application. Flynn argued on appeal that bankruptcy law formed a self-contained code, that Everyday needed to issue its own summons, and that he should be able to challenge the transfer and the petition’s requirements before substitution.
The Court of Appeal rejected the argument that Order 17, rule 4 cannot apply in bankruptcy proceedings. It held that the transfer was an event after the proceedings began and that the rule’s ordinary language covered a bankruptcy petition. The court also said the act of bankruptcy arose from Flynn’s failure to comply with AIB’s valid summons; it did not have to be an act committed specifically in respect of Everyday. A new summons from Everyday was not required for the existing petition to proceed.
The court held that Flynn could no longer contest the assignment in this case, given his prior acknowledgment of Everyday’s status in the personal insolvency process and the opportunity he had to investigate or challenge the transfer then. It said the evidence established Everyday as AIB’s successor and assignee.
However, the appeal concerned substitution, not the petition’s final merits. Whether Everyday can meet the statutory requirements, including those concerning the petitioner’s undertakings and security, remains for the High Court at the petition hearing. The Court of Appeal affirmed the substitution order and proposed that Everyday receive its appeal costs, subject to Flynn’s right to seek a different costs order within 14 days of electronic delivery.