A debt fund has convinced the Supreme Court to hear its appeal against authorizing a personal bankruptcy (PIA) procedure that allows a man to keep his €1.8million farm fortune.
romontoria (Oyster) DAC’s appeal relates to the personal bankruptcy agreement of Fergus O’Connor, 47, from Co Wexford, who was owed a total of €1.1million.
It is said to be the first time the Supreme Court has heard and approved a contested PIA motion relating to a farm described as a “core estate” supporting the crop and sheep farmer’s livelihood.
In a decision allowing the appeal, three Supreme Court justices said they will consider what constitutes an “easily realizable asset” in connection with bankruptcy and PIA filings.
In requesting the leave, Promontoria argued that the High Court’s decision will have a “significant impact” on creditors’ ability to collect debt from a debtor who owns farmland in excess of the value of the debt owed.
Following High Court logic, the fund says, a debtor receiving income from a property could potentially foreclose on that property and benefit from being declared bankrupt and receiving a PIA.
Under the approved agreement, Mr. O’Connor, a estranged father of three, will continue to make repayments over 30 years to fully service the €874,000 debt owed to Promontoria. All unsecured creditors will be paid within three years.
He keeps his farming fortune worth $1.8 million.
With a net worth of €594,000, he was financially solvent but did not have enough cash flow to repay the debt as it fell due, the High Court heard.
The fund argued it had extensive collateral for the debtor’s assets, including its farm assets, which were “easily realizable” through a sale.
The fund argued in the High Court that the debtor was able to pay its debt but had chosen not to, and asked the court to tolerate that decision.
Despite the dissenting creditor, High Court Justice Alexander Owens found Mr O’Connor to be insolvent for the purposes of the Personal Insolvency Act 2012-2015 and approved the arrangement.
Mr O’Connor’s personal liquidator refused to allow the Supreme Court to appeal, arguing that the High Court failed to make a decision of principle.
This view was supported when Mr Justice Owens clarified after his decision that he had not said farmland would never be considered an “easily realizable asset” in bankruptcy cases. He said his decision was limited to the facts of the specific case.
The practitioner also said the decision was based on Mr O’Connor’s level of debt, the value of the farm and the cost of liquidating the farm assets.
A three-judge panel of the Supreme Court, consisting of Ms Justice Elizabeth Dunne, Mr Justice Seamus Woulfe and the now retired Mr Justice John MacMenamin, was satisfied that exceptional circumstances merited a further appeal.
Mr O’Connor’s debts arose primarily from loans he and his now estranged wife took out from Ulster Bank in 2006 to purchase 64 acres of land. He then sold around €800,000 worth of assets to reduce his debt. The bank filed fees on lands he owns and later sold the debt to Promontoria.
https://www.independent.ie/business/farming/news/courts/supreme-court-to-decide-whether-farmers-debt-restructuring-should-have-been-approved-42188091.html The Supreme Court is to decide whether a farmer’s debt restructuring should have been approved