Electrical contractor has €2.7m of €2.9m debt written-off under insolvency deal

Judge says terms, including a near halving of mortgage debt, ‘a good deal’ for Thomas Fahy (61) from Claregalway

An electrical contractor will have €2.7 million of a €2.9 million debt written-off under a personal insolvency arrangement (PIA) approved by the High Court.

The arrangement, approved by Mr Justice Alexander Owens on Monday, includes the near halving of the €470,000 mortgage debt of Thomas Fahy from Cortoon, Claregalway, Co Galway.

Approval was sought by barrister Keith Farry, instructed by solicitor Nicola Nevin, on behalf of Nicholas O’Dwyer of Grant Thornton, Mr Fahy’s Personal Insolvency Practitioner (PIP).

The judge heard Mr Fahy is a married man with one child, has debts of some €2.9 million and his main creditor is Everyday Finance DAC, owed some €2.472 million.


Negative equity

A mortgage debt of €472,000 is also owed to Pepper Finance Corporation Ireland DAC in relation to Mr Fahy’s family home, which is in negative equity and has a current value of €240,000, the court heard.

A debt of €5,962 is owed to St Jarlath’s Credit Union in Tuam, an unsecured creditor which had voted in favour of the PIA. Mr Fahy (61) has pension and life policies, with a combined value of €228,000, the court heard.

Mr Fahy has a car valued at €3,000 and about €700 cash in bank and his pension is not accessible until his retirement, Mr Farry said. His net monthly income is €2,838 and the contribution available after outgoings is €546, the court heard.

Under the two-year PIA, the mortgage debt will be restructured and reduced to €240,000 and Mr Fahy will make monthly interest only mortgage contributions of €190 on a fixed 0.95 per cent interest rate for the two years.

The mortgage debt will be extended to 265 months and, after the two years of the PIA, the mortgage will be repaid on a capital and interest basis and the interest rate will revert to the ECB’s 0.95 per cent tracker rate, with monthly repayments estimated at €1,094.


The remaining balance on the mortgage, some €232,000 will be warehoused but will be written off over the term of the mortgage loan. If Mr Fahy maintains payments as agreed, the sum will be written off on maturity.

The PIA also provides for €7,900 to be contributed by Mr Fahy over the two-year term. After payment of €5,600 fees to his PIP, just over €2,000 is left towards the secured debt. Everyday will get a dividend of €2,108 and St Jarlath’s Credit Union will get €5.

Mr Justice Owens, who described the arrangement as a “good deal” for Mr Fahy, confirmed it was in compliance with the relevant provision of the PIA Acts.

He was satisfied there was a reasonable prospect that confirmation of the PIA will enable Mr Fahy resolve his indebtedness without recourse to bankruptcy and enable him to remain in his principal private residence, the judge said.

He considered Mr Fahy is reasonably likely to comply with the terms of the PIA, at least in the short to medium term. He was also satisfied the arrangement was not unfairly prejudicial to the interests of any interested party.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times