The High Court approved Laura Sweeney’s proposed Personal Insolvency Arrangement (PIA) despite its rejection by her sole creditor, EBS Ltd. The decision reversed a Circuit Court refusal of her application under section 115A(9) of the Personal Insolvency Acts.
The judgment, delivered by Ms Justice Baker on 31 July 2018, concerns a six-year arrangement that would reduce the mortgage secured on Sweeney’s home to its agreed market value of €130,000. She would make monthly payments on that amount, with the remaining mortgage balance treated as unsecured during the arrangement and written off at its end. The judgment records that €530.33 of the revised €594.72 monthly mortgage payment would be contributed by Sweeney through the PIA.
EBS objected that the arrangement did not reflect Sweeney’s repayment capacity, that the six-year term and related costs were excessive, and that childcare costs were too high. It proposed a mortgage payment of €1,082 a month, based on reduced additional costs, and a split mortgage. Correspondence between EBS and the personal insolvency practitioner appeared to indicate that amendments along those lines would be made, but the PIA submitted for approval retained a six-year term and did not include the proposed split or payment. Baker criticised the practitioner’s correspondence as careless and confusing.
The judge found that the proposed €1,082 payment was not affordable on the evidence of the family’s income and expenses, and would leave no room for other special costs. She accepted the evidence supporting childcare costs of €650 a month for the household, including that the cost had been renegotiated with the childminder. The judgment rejected EBS’s suggestion that the husband should take on more childcare to reduce those costs.
Baker also found the creditor’s proposed arrangement unsuitable in the medium term because it would become unsustainable when the child moved to secondary school. She concluded that writing down the secured mortgage to the home’s market value was not unfairly prejudicial to EBS in the circumstances. The judgment noted that a sale following possession proceedings would likely yield EBS less than the proposed PIA.
The court said it could not rewrite or vary a proposed PIA. It approved this arrangement after considering the statutory tests, including affordability, prejudice to creditors and the cost of retaining the principal residence. The possession proceedings had been adjourned. The order approved the PIA despite EBS’s rejection; the judgment does not state that those proceedings were dismissed.