The High Court has approved Personal Insolvency Arrangements (PIAs) that will allow a couple to write off a significant amount of their debt to financial institutions and retain their family home.
In a written judgment, Mr Justice Mark Sanfey said he was prepared to approve PIAs in respect of Eugene and Mary Power despite the fact the arrangements may result in the Powers having to live with less than the recommended ‘Reasonable Living Expenses’ at certain points.
The Powers, a married couple aged in their forties with five children, from Ballyglavin Park, Youghal, Co Cork, had accrued debts of just over €380,000.
They sought approval for PIAs that would have allowed them to retain their family home.
The PIAs will result in them writing down approximately €180,000 of their debts.
Under the arrangements, the mortgage on their home will be restructured, extended for a period of 27 years and repaid in full.
The PIAs will also see them continue to make repayments on their unsecured debts for the next 15 years.
It was claimed the plans would leave the couple’s debtors in a better position than if the Powers were adjudicated as bankrupts.
The Circuit Court had refused to approve the couple’s separate PIAs.
The couple, through their Personal Insolvency practitioner John O’Callaghan, who was represented by barrister Keith Farry, appealed the Circuit Court’s decisions to the High Court.
The main creditor that had objected to the approval was the financial fund Promontoria Scariff DAC, which holds the mortgage over the Powers’ family home, and is owed €155,000.
It argued the proposed arrangements were neither affordable nor sustainable.
The couple’s other unsecured creditors include Cabot Financial Ireland Ltd, Bank of Ireland, and a local Credit Union.
In his judgment, Mr Justice Sanfey said that while there were some minor differences, the couple’s debts were jointly held, and between them they owed approximately €380,000.
The judge noted that Mr Power, who works for a metal recycling company, and Ms Power, who works in the home, got into financial difficulties after they sold their former family home for a sum that was far less than they had hoped.
The judge said the main issues in the hearing before him were whether the debtors’ financial position has been properly vouched, whether the PIAs were sustainable given that they would require the Powers to live beneath the Insolvency Service of Ireland’s guideline on reasonable living expenses, and if the PIAs were prejudicial to the interests of the objecting creditor.
The judge said Promontoria had suggested that, if the PIAs sought by the Powers were approved, the family would have a monthly shortfall of €500 in their Recommended Living Expenses.
He said that he was satisfied from the evidence before the court that any shortfall would be “significantly less” than had been contended by the objecting creditor.
“It seems to me the Powers have established that notwithstanding that the arrangement may cause them to live below the Recommended Living Expenses at certain points, they will be able to arrange their affairs so that they and their children can generate sufficient income to maintain a reasonable standard of living,” he said.
He was further satisfied that the Powers’ financial situation had been properly put before the court and the PIAs did not prejudice the objecting creditor’s position.
The judge set aside the Circuit Court orders and confirmed the activation of the Powers’ PIAs.