Court annuls couple’s bankruptcy after claims they were misled

The High Court has annulled the bankruptcy of a couple who claim they were misled by a financial advisor and should never have been declared bankrupt in the first place.

In the first such application since new bankruptcy laws were enacted, Ms Justice Caroline Costello made orders annulling the bankruptcy of Martin Byrne and his wife Catherine White Byrne.

Earlier this year the couple, from Knocknaveigh, Virginia, Co Cavan were adjudicated bankrupts by the High Court.

Yesterday the couple's lawyer Bill Holohan said they should never have been adjudicated bankrupt as there was a viable alternative about which they were not informed by their advisor.

Mr Holohan said the couple, who have three children, sought advice in 2013 relation to their financial difficulties and their priority was to keep their home. They met with and sought advice from the advisor whom, they claim, is a bankruptcy expert.

Mr Holohan said the couple were informed and were led to believe by the advisor all their proposals to their creditors to restructure their debts had been rejected. Following consultations with officials of the Insolvency Service, the couple say there was a viable alternative to bankruptcy.

It is claimed a report prepared by a Personal Insolvency Practitioner whom they consulted had advised they could have done a Personal Insolvency Arrangement with their creditors instead of seeking bankruptcy. A letter from another PIP, whom they never met and which was included as part of their application for bankruptcy, stated otherwise.

In the circumstances, there was a suitable alternative available and his clients should never have been adjudicated bankrupts, Mr Holohan said. His clients alleged they were misled by their financial advisor and that they would never have petitioned the court to be adjudicated as bankrupts had they been properly advised.

The couple had also never met with a Personal Insolvency Practitioner prior to their application to be adjudicated bankrupts although this was among the statutory requirements before a person can apply to be adjudicated bankrupt, Mr Holohan said.

The couple claim their financial advisor procured a PIP on their behalf, who had prepared a report included as part of their bankruptcy application but did not do so on their instruction. Their bankruptcy should be set aside on this ground as well, Mr Holohan added.

In her ruling, Ms Justice Costello said she was satisfied, given the facts of the case, to annul the Byrne’s bankruptcy.

The ruling was welcomed by David Hall of the Irish Mortgage Holders Organisation, which had supported the couple's application. Mr Hall called on the Insolvency Service and the Central Bank to put in place proper consumer protection for debtors going through bankruptcy.

Speaking afterwards, Mr Hall said: “We are delighted the court has annulled the Byrnes bankruptcy. ”

“While this is the first application of its type to come before the court, there are a number of other people in the same situation as the Byrnes whose cases have yet to be heard,” he added.