An application to approve a man’s personal insolvency arrangement concerning a €3.1 million debt was adjourned after a High Court judge expressed a provisional view there was “not a snowball’s chance in hell” he would approve it.
The proposed arrangement for Eamon Hayes, of Ballinrea Road, Carrigaline, Co Cork, would let him go away “scot free” in return for a €70,000 contribution from his industrial flooring company, Mr Justice Alexander Owens said.
The judge said he believed Cork Coating Flooring Ltd, in which Mr Hayes and his wife hold 50 per cent shareholdings, could pay Mr Hayes “a lot more” and his creditors could do better over time.
Pepper Finance Corporation Ireland DAC, which is owed €2.77 million, opposed the personal insolvency arrangement (PIA) in court, where it was represented by barrister Cónall O’Neill, instructed by solicitor Cliodhna Walsh.
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At the outset of the application on Wednesday, counsel for Mr Hayes’s personal insolvency practitioner, Alan McGee, said the main dispute was over how the sale of 10 buy-to-let properties was to be distributed. Five other properties have been sold.
The judge said he had seen the financial information and had observations. He said €70,000 was being put in from the company, which had “very considerable reserves”. It seemed Mr Hayes decided in 2018 to give his wife a half share in the company when he “owed a lot of money”.
The court must consider the means available to come up with proposals for creditors, he said. That consisted not only of a company’s value, or what a director chooses to pay themselves, but also the company’s capacity to generate income.
The figures into last year showed a “substantial cash balance” in the company and capacity “to earn a lot of money”.
His view provisionally was not to approve the proposed PIA and that the money being offered by Mr Hayes “is over too short a period and he can put his shoulder to the wheel to a much greater extent”.
“It is a crazy idea [that] this man decides himself how much he and his wife can take out of a company.”
The judge referred to “blather” in court documents that Mr Hayes thought he did not own the properties at issue.
He said Mr Hayes was getting rental income “for the past 10 years and not paying tax on it”. The judge added that Mr Hayes and his father – who died in 2010 – had bought the houses.
He said Mr Hayes is aged in his 50s and the court was convinced “a lot more money” could be put forward.
In the court documents, it was stated that Mr Hayes’s financial difficulties arose from a €3.4m commercial tracker loan, interest only, taken out in 2007. His father Edward had 14 buy-to-let properties with various banks in 2007 and was approached by PTSB and offered the commercial tracker loan. His son Eamon was required to join in the loans and come on title.
At the time of his father’s death in 2010, it was stated that Eamon Hayes believed, based on a letter issued to his accountants, he had no beneficial interest in the properties and only realised in 2021, on foot of investigations by his PIP, whom he approached over interest difficulties on the loan, that the properties were registered in the joint ownership of himself and his father, on whose death they vested in Eamon Hayes.
After making his observations, the judge granted the PIP’s counsel five minutes to take instructions, adding: “There’s not a snowball’s chance in hell I will approve it.”
After taking instructions, counsel sought an adjournment, which the judge granted. Counsel was entitled to an opportunity to address the court’s observations and the court did not like “foisting” something counsel had not had an opportunity to deal with, the judge said.
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