Longford receptionist has €3m debt written off for €1,600 payment

Deal reached as part of 65-year-old’s personal insolvency arrangement

Personal loans of €2.65 million owing by the 65-year-old woman to consumer lender Cabot Financial are being written off in exchange for a once-off payment of €1,432. Photograph: iStock

A Co Longford woman had €3 million worth of debt written off for a payment of €1,600 as part of a personal insolvency arrangement approved by the High Court this week.

Josephine Cooney of Mostrim Road, Ballymahon, Longford was unable to pay her debts and sought a financial rescue under the State's personal insolvency regime.

Mr Justice Denis McDonald signed off on the personal insolvency arrangement earlier this week, writing down the mortgage on her home from €507,000 to €175,000, the current market value of the property.

Under the four-year personal insolvency arrangement, the interest rate on the written-down mortgage due to Start Mortgages was reduced to 3 per cent and the mortgage period extended to 13 years.


Personal loans of €2.65 million owing by the 65-year-old woman, who is employed as a receptionist, to consumer lender Cabot Financial are being written off in exchange for a once-off payment of €1,432.

This represents a return of just 0.06 per cent to the creditor, but the court was told the company, an unsecured creditor, would have received half this sum if Mrs Cooney was declared bankrupt.

The €2.65 million debt arose as a result of a failed hotel business that Mrs Cooney and her husband ran until the economic crash a decade ago.

The debt was originally provided by Ulster Bank and later purchased by “vulture fund” Promontoria, an investment fund specialising in distressed debt, before being acquired by Cabot Financial, a credit servicing and debt collection firm.


Cabot had challenged the debt write-down plan, resulting in the case being appealed from the Circuit Court to the High Court.

During the four-year arrangement, Mrs Cooney will pay reduced mortgage payments of €449 a month and in the fourth year, €78,500 will be cleared with a lump sum from a pension owned by her husband.

Her monthly mortgage repayments will then increase to €880 for the remainder of the mortgage.

The court was told that the arrangement – devised by personal insolvency practitioner Eugene O'Brien of The Debt Clinic and presented in court by Keith Farry BL – was "fair, transparent and equitable for the debtor and each class of creditor party to the arrangement" and a better return than under bankruptcy.

Derek Scanlon, an insolvency practitioner at The Debt Clinic who worked on the case, said the write-down was “substantial” but showed the “fundamental purpose” of the legislation at work.

“The debtor pays what they can afford to pay and this is what the debtor could afford to pay,” said Mr Scanlon.

“It is recognising at this late point that the write-downs should have been taken on many loans 10 years ago. This just shows that somebody somewhere had not taken a sword to the balance sheet or had not sought to engage with the debtor as they should have.”

Simon Carswell

Simon Carswell

Simon Carswell is News Editor of The Irish Times