Herbert Street Property Finance Unlimited Company v McKillen Junior

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Liam Kennedy
• Judgment Date: 13 August 2026
• Neutral Citation: [2026] IEHC 585
• Docket Number: [Record No. 2026/6317 S]

Between

Herbert Street Property Finance Unlimited Company

Summoning Creditor

and

Patrick McKillen Junior

Debtor

[2026] IEHC 585

[Record No. 2026/6317 S]

THE HIGH COURT

Bankruptcy summons – Improper purpose – Abuse of process – Applicant seeking to set aside a bankruptcy summons – Whether the applicant had established a real and substantial issue for trial

Facts: The applicant, Mr McKillen, applied to the High Court seeking to set aside a bankruptcy summons (the Summons) issued by Herbert Street Property Finance (the Creditor). The Creditor claimed that the applicant committed an act of bankruptcy by failing to pay sums due pursuant to a guarantee and indemnity (the PG) which he entered into in the Creditor’s favour in respect of amounts allegedly owed pursuant to a loan (the Facility) which the Creditor extended to a company called Cool Dust Limited (CD). The applicant was CD’s sole director and played a leading role in negotiating the Facility and the PG. The stated object was to fund the completion of a commercial development, realising profit which, as well as repaying the Facility, would enable other commitments to be met and projects completed. The applicant said that, although “papered” as a corporate loan, the transaction was actually a personal loan to him which was unlawful because, in substance, it was an indirect consumer loan, which the Creditor was not authorised to provide in Ireland. That issue, and a related point as to the Creditor’s claim for interest under the European Communities (Late Payment in Commercial Transactions) Regulations 2012 constituted the main ground for this application. The applicant also said that the figure claimed was overstated due to a penalty clause and because his liability as a guarantor, if any, had been discharged due to engagement between the Creditor and CD. He argued in the alternative that the Summons was an abuse of process, was brought for an ulterior purpose, and the Court should exercise its discretion to dismiss it.

Held by Kennedy J that the Creditor was not obliged to obtain a judgment against the applicant or to pursue CD before initiating these bankruptcy proceedings. Kennedy J held that, in the absence of an issue for trial the Creditor was entitled to use the bankruptcy process to enforce an undisputed debt. He found that the applicant had not met the low bar of establishing a real and substantial issue to be tried; nor had he established that the proceedings represented an abuse of process or were pursued for an improper or collateral purpose. Kennedy J dismissed the application; however, the applicant could contest the petition at its hearing and he was also pursuing plenary proceedings.

Kennedy J, subject to any submissions that may be received, was minded to dismiss the application and adjourn the petition for six months to allow the parties an opportunity to progress the plenary proceedings; however, any such stay could not be open-ended. He would review the position in December, following which, depending on intervening developments, he may, inter alia, either continue the stay for a further short period or lift it to allow the petition to progress to a hearing without further delay. However, he would hear the parties on 2 November 2026 before finalising his directions (and to determine whether any steps could usefully be taken concurrently with the plenary proceedings) and also to deal with the costs of this application.

Application refused.

Representation

Bernard Dunleavy SC and Niall Ó hUiginn instructed by AMOSS LLP for the Creditor Gary McCarthy SC and Keith Farry, instructed by Kane Tuohy Solicitors for the Debtor.

JUDGMENT of Mr. Justice Liam Kennedy delivered on 13 August 2026 .

1 . The Applicant seeks to set aside a bankruptcy summons (the Summons) issued by Herbert Street Property Finance (the Creditor 1). The Creditor claims that the Applicant committed an act of bankruptcy by failing to pay sums due pursuant to a guarantee and indemnity (the PG) which he entered into in the Creditor's favour in respect of amounts allegedly owed pursuant to a loan (the Facility) which the Creditor extended to a company called Cool Dust Limited (CD). The Applicant was CD's sole director and played a leading role in negotiating the Facility and the PG (the Agreements). The stated object was to fund the completion of a commercial development (the Pinnacle), realising profit which, as well as repaying the Facility, would enable other commitments to be met and projects completed. The Applicant says that, although “papered” as a corporate loan, the transaction was actually a personal loan to him which was unlawful because, in substance, it was an indirect consumer loan, which the Creditor was not authorised to provide in Ireland. That issue, and a related point as to the Creditor's claim for interest under the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (the Late Payment Regulations) constitute the main ground for this application. The Applicant also says that the figure claimed was overstated due to a penalty clause and because his liability as a guarantor, if any, has been discharged due to engagement between the Creditor and CD. He argues in the alternative that the Summons is an abuse of process, was brought for an ulterior purpose, and the Court should exercise its discretion to dismiss it.

2 . I am not persuaded that I should dismiss the Summons. The Applicant has neither established a real and substantial issue for trial nor satisfied me that these proceedings were brought for an improper purpose or for an ulterior motive or that they represent an abuse of

process. Nor am I persuaded that the Creditor was obliged to litigate or pursue enforcement action against either CD or the Applicant before issuing the Summons. My dismissal of this application does not finally determine the substantive issues. The Applicant is entitled to pursue a claim he has initiated and which is now pending before the Commercial Court and to contest the petition in these proceedings. In so doing he may seek to revisit issues raised herein, including, where appropriate, with the benefit of cross examination.

Section 1: Irish Bankruptcy Law

3 . The relevant provisions of the Bankruptcy Act 1988 (The Act) include:

• a. s.8(1) which permits a creditor to apply for liberty to issue a bankruptcy summons where the debtor owes a liquidated sum amounting to at least €20,000 which is provable in bankruptcy. If the debtor fails to respond appropriately (by, inter alia, moving to set aside the summons or paying the amount due), they will have committed an act of bankruptcy which can ground a bankruptcy petition;

• b. s.8(5) permits respondents to apply (within 14 days) for the dismissal of such summonses and s.8(6) provides that:

  “(6) The Court—(a) may dismiss the summons with or without costs, and (b) shall dismiss the summons if satisfied that an issue would arise for trial.”

4 . S.8(6)(b) is mandatory. The Court must dismiss the summons if an issue would arise for trial. Even without any such issue, the Court has a discretion to dismiss under s.8(6)(a).

5 . The legal principles are settled:

• a. where an issue arises for trial, the Court must dismiss the Summons 2; however, as appears below, it must be a real and substantial issue which is, at least, arguable and with some prospect of success.

• b. The summons must also be dismissed if the debt is overstated 3.

• c. Even if no issue for trial arises, the Court has a discretion to dismiss the summons under s.8(6)(a), including on grounds of abuse of process. A collateral purpose, ulterior motive or abuse of process may justify dismissal, but a bare assertion will not suffice if there is ample commercial explanation for the action 4.

• d. A debtor seeking to go behind a judgment to assert a dispute or a collateral purpose faces a heightened threshold 5.

6 . The authorities confirm that the Court must be satisfied any issue for trial is real and substantial, but the parties disagreed as to the extent to which it may consider the credibility of the evidence. The Creditor criticised the Applicant's submissions on this and other points, submitting that certain citations were unreliable, misrepresenting or overstating the authorities. The Applicant's counsel dealt with at least some of these criticisms and in any event many principles (if not their application) are uncontroversial.

7 . The Applicant did not deny that points raised must have credibility, citing National Bank of Ras Al-Khaimah (Rakbank) v. FK [2021] IEHC 541 ( Rakbank) as an authoritative restatement of the test ( Rakbank, inter alia, affirmed the need for any defence to have credibility) and the Court of Appeal decision in Ennis Property Finance DAC v. Carney [2019] IECA 71 ( Ennis) in which Irvine J. (as she then was) emphasised that the Court must not seek to resolve disputed questions on such applications. He submitted that where, as in this case, the Summons is not grounded on a judgment, the Debtor can simply dispute the debt. He also cited the Supreme Court's decision in Minister for Communications v. Wood [2017] IESC 16 ( Wood) in which Dunne J. cited the decision of Clarke J. (as he then was) in McGrath v. O'Driscoll [2007] 1 I.L.R.M. 203, a summary judgment decision, to the effect that:

“any evidence of fact which would, if true, arguably give rise to a defence will, in the ordinary way, be sufficient to require that leave to defend be given so that that issue of fact can be resolved.”

Counsel submitted that that formulation requires only that the debtor's factual case, at its height, would arguably raise an issue requiring plenary determination; the court cannot assess credibility on the application; my own judgment in Mars Capital Finance Ireland DAC v. Alan Phelan [2026] IEHC 100 ( Phelan) was distinguishable as that summons was based on a...