High Court approves insolvency agreement to write-off €2.7 million debt

High Court reporters

A personal insolvency arrangement (PIA) which allows a Co Galway-based electrical contractor to write off approximately €2.7 million in debt owed to financial institutions has been approved by the High Court.

Mr Justice Alexander Owens, who approved the PIA in respect of Thomas Fahy on Monday, described the arrangement as being "a good bit of business".

Under the PIA Mr Fahy's unsecured debts of approximately €2.5 million will be written off for a payment of just over €2,000.

The court heard that under the scheme Mr Fahy, a 58-year-old self-employed electrical contractor from Cortoon, Claregalway, Co Galway will retain his family home, and his mortgage will be restructured, and partially written down by €230,000 over time.

The court heard that Mr Fahy got into financial difficulties with total debts of over €2.9 million.

As a result of his difficulties Mr Fahy obtain the services of Personal Insolvency Practitioner (PIP) Nicholas O'Dwyer, and sought to enter into a PIA, which when completed will see him return to solvency.

His main unsecured creditor is Everyday Finance DAC which was owed just over €2.47 million.

Mr Fahy, who is married with one dependent child, owes Pepper Finance Corporation some €472,000 in respect of his mortgage, while his home is worth €240,000.

On Monday barrister Keith Farry Bl for the PIP said that Mr Fahy's creditors will fare better under the PIA compared to if he was adjudicated a bankrupt, where the creditors would receive nothing.

The proposed 24-month PIA will be funded with a lump sum payment of €7,900.

Counsel said that €5.600 of that payment will cover the PIP's fees, while the remainder will be paid to the unsecured creditors, giving them a very small dividend on what is owed.

Counsel said that as part of the arrangement with Pepper Finance, €232,000 of what is owed on Mr Fahy's mortgage will be written off over time.

This is dependant on Mr Fahy making monthly capital and interest repayments, based on the house's value of €240,000, of approximately €1094.29 over the next 265 months to Pepper.

Counsel added that Mr Fahy will make interest-only payments of €190 per month to Pepper for the first 12 months of the arrangement.

There were no objections to the PIA being approved.

Mr Justice Owens said that the proposal in respect of the debtor met the required criteria under the insolvency laws, and he approved the PIA.