The High Court refused an application to confirm a proposed personal insolvency arrangement, finding that the debtor had not established a “relevant debt” under section 115A of the Personal Insolvency Acts.
The judgment, delivered by Mr Justice Mark Sanfey on 12 October 2020, addressed that eligibility requirement only. The debtor’s personal insolvency practitioner, John O’Callaghan, had applied under section 115A(9) after the creditors did not approve the proposal. Although 65% of the total debt represented at the meeting voted in favour, only 46% of unsecured debt voted in favour; the statutory threshold for approval by that class was more than 50%. No creditors attended to oppose the court application.
The proposed six-year arrangement was intended to restructure the mortgage on the family home and dispose of other properties. The debtor had lived at the Cork property on 1 January 2015, when the secured mortgage had been in arrears or subject to an alternative repayment arrangement. He later lived in rented accommodation in Drumcondra. The court noted that he had not lived in the Cork property at any point during the personal insolvency process.
The practitioner and debtor argued that the legislation did not require residence at a particular date. They relied on earlier High Court decisions, including one in which a debtor who was not living in the property on 1 January 2015 did live there when insolvency proceedings began. They also argued that excluding people who had left a family home after a relationship breakdown could be unfair.
Justice Sanfey said the statutory definition did not specify a particular date on which the debtor must reside in the property, but it did require the secured property to be a dwelling in which the debtor “ordinarily resides”. He read the legislation as requiring residence during the insolvency process, rather than residence only at some time in the past. The earlier case relied on by the debtor involved a person who was living in the property when proceedings commenced, unlike this debtor.
The court concluded that the debtor could not establish a relevant debt because he had left the property before the insolvency process began. It therefore refused the practitioner’s application. The judgment did not confirm or assess the proposed arrangement’s other terms. The court invited written submissions within 14 days on the precise orders to be made, including costs.