The High Court has said it proposes to confirm a personal insolvency arrangement for Frank McNamara, but postponed making a formal order until it receives confirmation of when assets in his late father’s estate are expected to be realised.
In a judgment delivered on 2 March 2020, Mr Justice Denis McDonald concluded that Tanager DAC’s three objections did not justify refusing the arrangement. Tanager, which holds a mortgage over the McNamaras’ family home, had argued that the proposal unfairly prejudiced it, did not use the debtor’s full means to repay creditors, and was based on an incomplete or inaccurate prescribed financial statement.
The objections centred on differences between a January 2016 financial statement supplied to Tanager and a statement prepared for the insolvency process in October 2016. The first put the debtor’s interest in his late father’s property at €500,000 and recorded monthly rent of €800; the later statement valued his expected inheritance at €182,500 and recorded no rental income.
The judge accepted the explanation that the earlier figure mistakenly reflected the whole property’s value and did not account for specific legacies or estate costs. He found that the later inheritance estimate, excluding rent, was correct. The rent should have been disclosed in the later statement because the debtor was receiving it, but the judge found substantial compliance with the statutory requirements in the circumstances.
Further evidence showed that rent from the estate property had been used for household expenses. The debtor said he had disclosed the rent to the personal insolvency practitioner, who treated it as an estate asset rather than continuing income. The judge said the practitioner should have disclosed the issue to the court earlier. He described the response to Tanager’s concerns before the May 2019 hearing as unsatisfactory, but concluded that the late disclosure did not warrant dismissing the application. Among the factors he considered were that the rent was later accounted for, the estate would not seek repayment of earlier rent used by the debtor, and the debtor had begun earning income playing music at funerals.
A €28,800 payment, described in evidence as a gift from family members, was paid into the estate’s solicitors’ account for creditors. The judge noted that the enhanced inheritance and payment were expected to raise the estimated dividend to unsecured creditors from five to seven cent in the euro. These figures remained estimates pending sale of the estate property. He also found that any possible tax liability on the gift would not put the arrangement’s sustainability at risk.
The judge was satisfied that the available assets had been brought to bear for creditors and that Tanager was not unfairly prejudiced, noting that the arrangement would benefit it more than bankruptcy. He said he would hear the parties later on possible costs arising from the delay and nondisclosure.
The court’s decision was not yet a formal confirmation order. The judge made confirmation conditional on an update that the late father’s estate would be administered and its assets realised within a relatively short period. He also directed counsel to prepare a draft order recording errors in the proposed arrangements; he said the court could not itself amend those arrangements.