High Court Sets Aside Protective Certificates

Author:Ms Julie Murphy-O'Connor

In two separate cases, following a challenge by a financial institution in each case, the High Court has held that it will set aside protective certificates granted to debtors in personal insolvency proceedings where there has been material non-disclosure in respect of the debtor's assets.

The Personal Insolvency Act 2012 (as amended) permits a debtor to apply to court for a protective certificate while making a proposal for a debt settlement arrangement or a personal insolvency arrangement. A protective certificate affords comprehensive protection to a debtor from his or her creditors for a period of 70 days, which period can be extended on application to court. This protection period allows breathing space for the formulation of proposals for an arrangement with creditors which would resolve his or her indebtedness.

In two separate judgments James Nugent & the Personal Insolvency Act 2012 [10 March 2016] and Fergal McManus & the Personal Insolvency Act 2012 [27 May 2016], Ms Justice Baker set aside the protective certificates granted and provided guidance on the circumstances in which the courts may set aside protective certificates. She held that the High Court was not restricted by section 97 of the Act, which sets out a specific test to be satisfied before a creditor can set aside a protective certificate. She held that the court has, additionally, an inherent jurisdiction to set aside a protective certificate (or an extension to a protective certificate) in circumstances where there has been a lack of candour and full disclosure in the facts attested to before the court, and she emphasised the constitutional imperative of fair procedures to those affected by, but not on notice of, the...

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