Court approves debt for equity swap insolvency arrangement

The High Court has approved a personal insolvency arrangement (PIA) for a businessman with debts of more than €2 million.

The PIA was granted in favour of Neal Sweeney of Liscarton House, Navan, Co Meath. It is the first to be approved by the High Court which involves a debt for equity swap.

The PIA was approved in a recent decision by Mr Justice Denis McDonald.

Mr Sweeney's main secured creditor is financial fund Promontoria Scarriff DAC. Other creditors include Promontoria Finn Ltd, and Cabot Finance Ireland Ltd.

The application to approve Mr Sweeney’s PIA, where his main creditor has accepted a 41 per cent share in his family home, was not contested.

Economic crash

His debts arose from arrears on the mortgage of his family home as well as residual debt from another property that had been previously sold.

Mr Sweeney and his family were involved in the well-known business McElhinney's Ladies Fashions in Athboy, which got into difficulties some years ago following the economic crash.

Keith Farry BL said Mr Sweeney's personal insolvency practioner Cormac Mohan was satisfied that the PIA represented a better outcome for the creditors compared to a bankruptcy situation.

The PIA would allow Mr Sweeney and his family to remain at the family home, and return to solvency.

Promontoria will receive equity of €250,000 in his family home, which is valued at €600,000.

As part of the agreement, Mr Sweeney who now works in the building sector, will continue to make repayments on his mortgage of €350,000.

Applications to approve several other PIA’s where debt for equity swaps are proposed remain pending before the High Court.

Those applications are awaiting the outcome of a judgment in a case, unrelated to Mr Sweeney’s, where a PIA which includes a debt for equity swap, has been contested by a creditor.