In a significant judgment, the High Court has held that there is no bar on a personal insolvency arrangement including a split-mortgage. The court also held that while a Personal Insolvency Practitioner is required to have regard to a creditor’s proposed solution for resolution of mortgage debt (eg a split-mortgage), the PIP will not be acting unreasonably by failing to adopt that solution and instead adopting another reasonable solution (eg debt write-down).

The Court of Appeal has allowed an appeal by the Edward Holdings group of companies against a decision of O’Connor J in the High Court refusing to appoint an examiner to four of the seven group companies in respect of which an examiner was sought to be appointed. The group, which is controlled by Gerry Barrett, owns, amongst other assets, the Meyrick and G hotels in Galway.

Baker J in the High Court has given three recent judgments in matters concerning Section 115A(9) of the Personal Insolvency Acts 2012 – 2015 (the Acts). This Section gives a Court power to review and approve a Personal Insolvency Application (PIA) rejected at a meeting of creditors.

Re JD (a debtor) [2017] IEHC 119, High Court, 21 February 2017

On 22 May 2017, the High Court delivered judgment in favour of two homeowners, Paula and Colm Callaghan, allowing a significant write-down of their mortgage debt and rejecting a proposal by their lender, KBC, that the debt should instead be deferred or ‘warehoused’ for future enforcement.

BACKGROUND

The Callaghans had a mortgage with KBC for over €285,000 for their family home which was valued at just €105,000. The mortgage fell into arrears and the Callaghans sought to enter into a personal insolvency arrangement (PIA).

Introduction

The Companies (Accounting) Act, 2017 (the Act) was signed into law by President Michael D. Higgins on 17 May 2017 and came into operation on 9 June 2017. Sections 92 and 98(d) of the Act provide clarity and certainty on the issue of whether the claim of the holder of a floating charge, once crystallised, ranks in priority to the claim of a preferential creditor following the High Court and the Supreme Court decisions of In the Matter of Re In the Matter of JD Brian Limited (In Liquidation) (the JD Brian case).[1]

Receivers are plagued by the registration of lis pendens on lands over which they have been appointed. There is increasing frustration on the part of receivers as the bar to removing alis pendens is considerably higher than that required to register it.

Registering a lis pendens

A recent decision of the Court of Appeal is a useful reminder to receivers that contracts of employment between the company in receivership and employees continue to subsist.

A receiver must properly comply with the termination provisions in a contract of employment and has no additional powers to dismiss an employee over and above what powers the employer entity has to dismiss.

Employee dismissal by receiver

In a recent judgment, the High Court has provided further guidance on the correct approach to an assessment of an application under s115A of the Personal Insolvency Acts.

The High Court, in a recent decision, applied new Company Law provisions governing how banks deal with corporate customers who are in the process of liquidation.

Old provision

In the case of In Re Dunne (A Debtor) [2017] IEHC 59, High Court, Baker J, 6 February 2017 the High Court refused an application by debtors under Section 115A of the Personal Insolvency Acts 2012 to 2015 to overturn a secured creditor's (PTSB) objection to a Personal Insolvency Arrangement (PIA). The debtors had appealed from a Circuit Court decision upholding PTSB's objection.

Facts