SOLICITOR AND property investor Brian O’Donnell and his wife Mary Patricia filed for bankruptcy in London on Tuesday after Bank of Ireland rejected their proposal to apply for the more lenient individual voluntary arrangements (IVA) under UK bankruptcy law.

The O’Donnells, who owe Bank of Ireland €75 million, proposed earlier this month that they would apply for the IVA which allows individuals in financial difficulties to settle unsecured debt over a period of time, normally five years.

The proposal was drafted by the couple’s insolvency adviser David Rubin in London and submitted to the bank’s property specialist work-out team, but it was rejected.

The bank declined to comment.

Approval from the bank was required because under English law individuals need the support of 75 per cent of creditors in terms of value for the IVA to be binding.

Bank of Ireland, which secured a judgment against the couple in December, holds the vast majority of the couple’s personal debt.

Under an IVA agreement debtors are allowed to write off a substantial amount of debt. A sizeable proportion of the couple’s debt to the bank was unsecured so the bank faced a substantial debtwritedown under their proposal.

The O’Donnells filed for bankruptcy in the High Court in London last Tuesday as the bank was applying to the Commercial Court in Dublin to examine the couple on contradictions between two statements of assets they filed in March 2011 and February 2012.

The bank was told that properties in London, which the couple had previously said were partly or fully owned by them, were in fact to be owned by their children.

Mr Justice Peter Kelly ordered the couple to appear in court for cross-examination on April 17th to explain “alarming” disparities between their asset statements.

The judge, who learned of the bankruptcy filing on the day of the bank’s application, said he was “not impressed” with how the couple had dealt with the proceedings. His ruling now means that the couple must appear in court in Dublin before the first court appearance in their bankruptcy proceedings in the UK, which is likely to take place in May or June.

The bank is examining filings in the UK and considering what steps to take next in their action.

Brian O’Donnell, a former managing partner of William Fry solicitors, and his wife were among the more prolific Irish investors in overseas commercial properties during the boom years through their business, Vico Capital.