The High Court has refused applications by Noel and Britt Tinkler to confirm their proposed personal insolvency arrangements, after upholding objections by secured creditor Cheldon Property Finance DAC. The court found the proposals were not fair and equitable to Cheldon and that it had not been shown they were free of unfair prejudice to its interests.
The applications were made under section 115A of the Personal Insolvency Act. Creditors had rejected both proposals at meetings in January 2017, although the principal private residence creditor, Start Mortgages, voted in favour in each case. The court heard the applications and Cheldon’s objections over two days in July and October 2018.
The proposals treated the lenders differently. Start’s security was over the Tinklers’ family home, valued at €380,000, against mortgage debt of about €502,292. Its debt would not be written down; payments would be interest-only during the 72-month arrangement, after which full capital and interest payments would resume. Cheldon’s security was over Tinkler’s Yard, a commercial property valued at €350,000. The proposals would reduce its secured debt to that value, treat about €1.43 million as unsecured and pay a dividend of around 6% to 6.32% on that portion.
Justice Denis McDonald held that Start and Cheldon belonged to separate creditor classes because their rights under the proposals were too dissimilar. He found no adequate justification for the markedly more favourable treatment of Start. The practitioner had said it was necessary to obtain Start’s support for a proposal intended to preserve the family home. The judge said that seeking a particular creditor’s approval could not justify the disparity between creditor classes.
The court also compared Cheldon’s likely recovery under the proposals with a receivership. The judge rejected evidence that tenants would leave if a receiver were appointed, describing letters relied on for that claim as having been prepared for signature and of no evidential value. He concluded that a receiver could collect rent from Tinkler’s Yard and that Cheldon would likely recover more through rent and a later sale than under the proposals. The court therefore could not be satisfied that the arrangements were not unfairly prejudicial to Cheldon.
The judgment also recorded concerns about how Revenue debt, including a preferential element, was presented in Noel Tinkler’s proposal. The judge did not decide that issue, saying it was unnecessary after his conclusions on fairness and prejudice. He upheld Cheldon’s objections under both statutory grounds and refused to confirm either arrangement. The ruling did not confirm the proposals or make an order bringing them into effect.