The High Court has dismissed appeals brought on behalf of Allen and Elizabeth Nuzum against the Circuit Court’s refusal to confirm proposed personal insolvency arrangements. Mr Justice Denis McDonald found that the couple were insolvent under the relevant legislation, but that the evidence did not meet several other requirements for court confirmation.
The Nuzums’ only creditor was Promontoria (Aran) Ltd, which held a mortgage over their family home, valued at €1 million. The judgment put the debt at €710,625.96. Their proposed arrangements would have restructured the loan over 30 years, with monthly payments of €2,329.60 during a 12-month arrangement and €3,376.36 afterwards. The practitioner estimated total payments of €1,202,928.48 over the restructured term.
Promontoria opposed the proposals, arguing that the couple could sell the home, repay the debt and buy more modest accommodation, and that retaining the property under the proposals would unfairly prejudice the lender. The practitioner argued that the Nuzums were unable to meet their debts as they fell due. Ms Nuzum told the court that alternative accommodation would not meet the family’s needs.
The judge held that insolvency under the Personal Insolvency Acts is assessed by whether debts can be paid as they fall due, rather than by comparing total assets and liabilities. A family home would not ordinarily be treated as readily realisable, he said, but the court must consider the circumstances of each case. Here, the home’s equity was not so substantial that it would be absurd to disregard it, and selling it would take time while the family found suitable accommodation. The judge therefore assessed the couple’s ability to pay without counting the home’s value and concluded, on the evidence, that they were insolvent.
However, the practitioner had not provided enough detail to show that the costs of keeping the home were proportionate or that the statutory requirements concerning alternatives had been properly addressed. The proposed payments would leave a monthly affordability margin of €25.45, and the court had no sufficient evidence that the couple could continue their work until the mortgage ended when they would be 78 or 79. The judge was not satisfied that the arrangements were sustainable, would resolve the debts without a risk of future insolvency, or avoided unfair prejudice to Promontoria.
The judgment also records that the judge refused an application made during the appeal hearing to introduce further evidence about the couple’s business and ability to keep working. The application came after the matter had been fully argued, with no adequate explanation for not presenting the evidence earlier.
The court dismissed the appeals and affirmed the Circuit Court orders. It did not decide the remaining statutory requirements. The parties were invited to try to agree costs; if they could not, they were directed to submit their positions within 21 days for a later ruling.