The High Court has confirmed a 12-month personal insolvency arrangement for David Langan after rejecting objections by creditor Promontoria Aran Limited, including its claim that a charge over a County Wexford property was a prohibited preference.
In a judgment delivered on 13 June 2023, Mr Justice Mark Sanfey said the application was made directly to the High Court under section 115A(9) of the Personal Insolvency Acts, rather than as an appeal from a Circuit Court decision. He confirmed the arrangement, finding that none of Promontoria’s objections was valid. The court did not determine Promontoria’s separate claim to an equitable mortgage over the property, which remains the subject of other proceedings.
The arrangement proposed that the Wexford buy-to-let property be sold, with solicitor Tom Casey to be repaid €236,800 from the proceeds under a first legal charge. Any surplus would go into the arrangement for creditors. Promontoria argued that granting the charge in January 2019, within three years of Langan’s protective certificate, substantially reduced the assets available to creditors and breached the Act’s prohibition on preferences.
The judge found that the charge was not a preference under section 120(h). He said the evidence was that Langan had agreed in February 2017 to sell the property to fund Casey’s legal work, and the charge was later granted after substantial fees had accrued. In the circumstances, the charge secured payment for work needed to pursue litigation; it was not an illicit advantage at creditors’ expense of the kind the provision addressed.
Promontoria also argued that it had an equitable mortgage based on an earlier arrangement with Ulster Bank, and that the PIA unfairly preferred Casey’s charge over Promontoria’s registered lis pendens. The judge said the personal insolvency practitioner had sought details of Promontoria’s claimed security but received no response, and was entitled to treat its debt as unsecured for the arrangement. He said a lis pendens alerts readers to litigation affecting property interests but is not itself a security under the Act. The validity of Promontoria’s alleged equitable mortgage was for the separate 2019 proceedings, not this application.
The court also rejected the argument that Casey’s charge could not be recognised because it was not registered when creditors met on 12 March 2021. The judge said the court had already ruled on 8 March that Casey had proved the charge, and its registration application was pending; registration was completed later, within the arrangement’s 12-month term. He also rejected the claim that Casey’s court application breached the protective certificate moratorium, noting that it sought proof of debt, not enforcement.
The judgment directed the parties to file written submissions on costs and any ancillary orders within seven days. The court said they could address whether the earlier order concerning Casey’s proof of debt should be amended.