The High Court has adjudicated P. bankrupt on a petition brought by ACC Loan Management Limited, rejecting his arguments that the petition should be dismissed or delayed while related litigation and a potential damages claim remained unresolved.
In a judgment delivered on 19 January 2016, Ms Justice Baker found that the bank had not presented or continued the petition for an improper or collateral purpose. ACC claimed P. owed €3,647,281.92 under a High Court judgment made in July 2014. The petition was presented in April 2015. The judgment said the debt was secured against property valued at €895,000 in October 2013.
P. argued that ACC was using bankruptcy proceedings to prevent him pursuing litigation against the bank and receivers appointed over property. In earlier proceedings, another High Court judge had found the receivers were not validly appointed and that P. was entitled to damages for trespass. The bank and receivers appealed, and assessment of damages was deferred pending the appeal.
Justice Baker said the course of that litigation had not been anticipated when the bankruptcy petition was served. She also found that the property securing the debt was worth substantially less than the debt, and that adjudication could assist the bank in recovering at least part of what it was owed. She rejected the claim that the petition should be stayed or adjourned pending the appeal and damages proceedings, noting that the Official Assignee could pursue claims benefiting creditors and that P. could assist or, if permitted, pursue the claim himself.
P. also sought time to explore a personal insolvency arrangement. The court considered that route under section 14(2) of the Bankruptcy Act 1988, as amended. It noted that secured debts disclosed in P.’s statement of affairs were €4,289,400, above the €3 million threshold for a personal insolvency arrangement unless secured creditors agreed to waive the limit. The judgment said no evidence showed the bank or other secured creditors would agree. Although P. asserted special damages of about €350,000 and further damages, the court could not assess what he might recover.
The judge concluded that a personal insolvency arrangement was not shown to be a reasonable or practical option in the circumstances. With no argument that the statutory requirements for the petition had not been met, she ordered P.’s adjudication as bankrupt and refused to stay or dismiss the petition. She said the bankruptcy would not prevent him litigating the damages claim, subject to the Official Assignee’s role.