The High Court dismissed an application to confirm a proposed personal insolvency arrangement for Ann Fennell, finding that she was not reasonably likely to meet its terms and that the evidence did not establish the repayments were affordable or sustainable.
The judgment, delivered by Mr Justice Mark Sanfey on 29 April 2021, concerned Ms Fennell’s appeal from the Circuit (Personal Insolvency) Court’s refusal of her application under section 115A(9) of the Personal Insolvency Acts. Ulster Bank Ireland DAC, her sole creditor, opposed the arrangement.
The proposal would restructure the mortgage on Ms Fennell’s home in Woodview Park, Limerick, over 372 months in total. It provided for interest-only payments of €57.47 a month for 24 months, followed by monthly capital and interest payments of €238.74. The bank’s debt was €72,593.48 and the agreed property valuation was €180,000. The arrangement acknowledged that the term would probably extend beyond Ms Fennell’s life expectancy; at the time of the appeal she was 69, and the term would run to age 98 based on its original calculation.
The bank argued that the arrangement was unsustainable, including because it depended on support from Ms Fennell’s adult children and would extend the mortgage beyond her likely lifespan. It also raised concerns about the effect of the proposed arrangement on its regulatory provisioning. The bank had offered €15,000 toward relocation costs in an assisted surrender proposal, which was rejected.
The judge held that the Act did not permit extending the repayment term to a point when the debtor would no longer be making payments because she had died. He also found that the clause stating her estate would repay the remaining balance from sale of the home imposed no enforceable obligation on those administering the estate and gave the bank no benefit beyond its existing legal position.
The evidence about the children’s support was insufficient to establish affordability. Their letters referred to €40 monthly contributions, although the arrangement relied on €40 each per week. The court had no affidavits or financial information from them to assess whether they could sustain the payments.
The judge did not decide whether the proposed arrangement would unfairly prejudice the bank through provisioning, or whether the cost of allowing Ms Fennell to remain in her home was disproportionately large. He said those issues did not need to be resolved after his finding on compliance and noted that further negotiation might address the bank’s concerns about the property.
The court dismissed the application and adjourned the matter for mention at the first hearing of the Personal Insolvency List after the judgment, allowing the parties to consider the judgment and orders to be made.