The High Court refused to approve a personal insolvency agreement (PIA) that would have allowed a car sales manager to write off around € 190,000 in debt mainly owed to financial institutions.
The PIA was requested in respect of Keith Cremin of Subulter, Cecilstown, Mallow, County Cork.
He owed money to Pepper Finance Corporation DAC, which opposed the PIA, the Bank of Ireland, Everyday Finance and the Revenue Commissioners.
Judge Mark Sanfey ruled that it would be unfair to impose the PIA, involving a very substantial write-off of a loan in the absence of default, on the opposing creditor.
Mr Cremin, the judge said, has no other urgent insolvency issues and the PIA claim, which was made by a personal insolvency practitioner, was “premature” at best.
Upholding of a decision rendered by the Circuit Court which, in 2019, also refused to approve the PIA. the judge added that he hoped the parties would consider working together to find a solution to Mr Cremin’s financial difficulties.
The court heard that Mr Cremin, a 49-year-old married man with two dependent children, experienced financial difficulties when the car company he founded in 2006 struggled with the 2008 economic recession. It finally ceased its activities in August 2008.
He had taken out loans to buy equipment for the business.
He tried to settle his debts, but requested a PIA because he was unable to meet the payments. Under the proposed PIA, which was to last 24 months, Mr. Cremin reportedly paid monthly contributions of between 690 and 866 euros.
These payments, along with the cash on hand, would have seen a net payment of around € 18,000 made available to his creditors who would have received 11 cents in euros.
In addition, Mr. Cremin is said to have kept and continued to reimburse only the interest on his mortgage on his private principal residence until the end of the 24-month term of the PIA.
At the end of this period, he was offered to resume payment of the principal and interest on the mortgage, which would have been extended.
This property, a four bedroom house valued at € 185,000, of which over € 300,000 remains outstanding.
A principal repayment due on the mortgage is due to Pepper in 2025. Pepper, who acquired Mr Cremin’s mortgage from Ulster Bank, opposed the PIA.
Represented by Niall O hUiggin Bl, Pepper argued that she would suffer a significant write-off of what was due in a situation where there was no default on the loan by Mr. Cremin.
In his ruling, the judge said he acknowledged Mr Cremin was insolvent, had acted in good faith and was trying to get his finances in order.
However, Pepper’s complaints about the appropriateness of the PIA were “justified,” the judge found.
Mr. Cremin, he said, was on the terms of his mortgage payments with Pepper.
While he had other debts, there was no evidence of pressure exerted on him by the creditors concerned to collect those debts, the judge added.
In all the circumstances, the court said the PIA should not be approved.