The High Court declined to confirm two linked personal insolvency arrangements for Maeve Griffin and Timothy Gerard Griffin, finding it could not be satisfied that the proposals met statutory requirements on fairness, prejudice to the bank and creditors’ recovery. It adjourned the matter for a period of weeks before making an order, to give the parties an opportunity to explore a practical solution.
The judgment concerned KBC Bank Ireland Plc’s appeals from Circuit Court decisions confirming the arrangements under section 115A of the Personal Insolvency Act 2012. The proposals covered the couple’s debts and provided for them to retain their County Limerick family home. The bank’s secured debt of €277,308 was to be written down to the home’s agreed value of €140,000, with interest-only payments during a six-year arrangement. The balance was to be treated as unsecured.
The bank argued that the proposals were unfair to it and unfairly prejudicial, and that they did not require the couple to use their means to repay creditors as far as reasonably possible. It also objected to the treatment of Charleville Credit Union, whose €638,505 debt was secured against the couple’s former nursing home. The credit union was to receive sale proceeds for that property and share in distributions to unsecured creditors.
The judge found a substantial disparity between the projected returns to the bank and the credit union, and said the scale of provision for unsecured creditors had not been adequately justified. He concluded that the arrangements were not fair and equitable to the bank’s creditor class. He also found that the evidence did not adequately explain why the mortgage principal should be reduced to €140,000 when the proposals projected a monthly surplus of €1,596.26 after the arrangements ended. The court could not be satisfied that the debtors’ means had been applied to the extent reasonably permitted, or that the bank would not be unfairly prejudiced.
The judge rejected the bank’s separate counter-proposal, which would have shortened the arrangement to three years and increased mortgage payments, as unrealistic in light of the couple’s income and expenses. He accepted that it had been submitted too late for the practitioner to reformulate the proposals before the creditors’ meeting, while still considering it on appeal.
The court did not confirm the arrangements. The judgment records that the legislation provided no means to adjust arrangements already voted on by creditors. The judge said a new proposal could potentially address the concerns, and suggested that an application to make a fresh proposal before the usual 12-month period might be possible if the process had to restart. He expressed no confidence that a practical solution would be found, but adjourned for weeks to allow the parties to explore one.