Part 3, Chapter 4 of the Personal Insolvency Acts 2012–2015

CourtHigh Court
JudgeMr. Justice Mark Sanfey
Judgment Date05 February 2021
Neutral Citation[2021] IEHC 80
Docket NumberRecord No. 2019/542 CA
Date05 February 2021
In the Matter of Part 3, Chapter 4 of the Personal Insolvency Acts 2012–2015
And in the Matter of Keith Cremin of Subulter, Cecilstown, Mallow, Co. Cork (A Debtor)
And in the Matter of an Application Pursuant to Section 115A(9) of the Personal Insolvency Acts 2012–2015

[2021] IEHC 80

Record No. 2019/542 CA



Personal insolvency arrangement – Confirmation – Personal Insolvency Act 2012 s. 115A(9) – Personal insolvency practitioner seeking an order confirming the coming into effect of a personal insolvency arrangement – Whether the personal insolvency arrangement was appropriate

Facts: The creditor’s meeting to consider the personal insolvency arrangement (PIA) of the appellant debtor, Mr Cremin, was held on 28th February, 2019. Everyday Finance DAC, Bank of Ireland and the Revenue Commissioners voted in favour of the proposed PIA. The objecting creditor, Pepper Finance Corporation (Ireland) DAC (Pepper), voted against it. As the creditors had not voted in favour of the PIA in the proportions required by s. 110 of the Personal Insolvency Acts 2012-2015 (the Act), Mr Duffy, the personal insolvency practitioner (PIP) acting on behalf of the debtor, applied to the Circuit Court for an order pursuant to s. 115A(9) of the Act for an order confirming the coming into effect of the PIA. The Circuit Court gave judgment on 17th December, 2019, in which it refused the application. By notice of appeal of 19th December, 2019, the PIP sought to overturn that decision. In accordance with the usual practice, counsel for the parties submitted an agreed issue paper in advance of the hearing. The agreed issues were expressed as follows: “1. Relevant debt (a) Does the PIA contain a relevant debt for the purposes of section 115A(18) of the Personal Insolvency Act 2012 (as amended) in circumstances where the debtor was not in arrears on his mortgage repayments on 1st January 2015? 2. Eligibility (a) Does the debtor meet the eligibility requirements of section 91 of the Act? (b) In circumstances where the Debtor is not in arrears on his mortgage, how did he come to make the required statement under section 91(1)(g) of the Act that he had participated in the mortgage arrears resolution process operated by his secured creditor? 3. Failure to address the liability of the debtor’s co-borrower (a) Is the PIA unfairly prejudicial to the interests of Pepper on account of the failure to propose a restructure of the joint liability of the Debtor and his father, [Mr Cremin Snr]? 4. Sustainability (a) Is the PIA sustainable in circumstances where, within 4 years, there will be a shortfall of €155 per month when the mortgage repayments and the Debtor’s reasonable living expenses are accounted for? (b) Is the PIA sustainable in circumstances where, when both children are in second level education, there will be a monthly shortfall of approximately €370? 5. Appropriateness of the PIA (a) Is it appropriate to use a PIA for the purpose of converting a performing interest-only mortgage facility into an annuity mortgage with a significant write-down?”

Held by the High Court (Sanfey J) that the complaints of the objecting creditor in relation to the appropriateness of the arrangement were justified. Sanfey J noted that the debtor was in compliance with the terms of his loan with Pepper; he had other debts, although there was no evidence of any pressure exerted by the creditors concerned to collect those debts. Sanfey J held that the debtor may be said to be insolvent, but the principal private residence (PPR) loan had not caused or contributed to this insolvency. Sanfey J held that the objecting creditor would suffer a very significant write-off of its loan amount if the proposals were approved, notwithstanding that there was no default in repayments. The proposals appeared to Sanfey J to have been put before the creditors without any prior consultation with the creditor whose rights were to be most significantly diminished as a result of the proposals, and entirely without regard to the position of the co-borrower who was equally liable for the PPR debt. Sanfey J held that there was a fundamental unfairness in imposing on the objecting creditor a very substantial write-off of a loan which was performing and in respect of which no default arose, particularly where there were no other pressing insolvency issues. Sanfey J held that the debtor’s application was at best premature.

Sanfey J held that it was inappropriate to make an order confirming the coming into effect of the proposed arrangement.

Appeal allowed.

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 5th day of February, 2021


This case concerns an appeal of a decision of the Circuit Court of 17th December, 2019, to refuse an application by Daragh Duffy (‘the practitioner’ or ‘the PIP’), the personal insolvency practitioner acting on behalf of Keith Cremin, the debtor in the title of these proceedings and hereafter referred to as ‘the debtor’, pursuant to s.115A(9) of the Personal Insolvency Acts 2012–2015 (referred to collectively as ‘the Act’).


The matter came before the court on 13th July, 2020. Mr. Keith Farry BL represented the appellant debtor, and Mr. Niall Ó hUiginn BL represented the objecting creditor, Pepper Finance Corporation (Ireland) DAC (‘the objecting creditor’ or ‘Pepper’). Both counsel made extensive submissions, although there were no written submissions as such. The parties did agree a helpful issues paper in advance of the hearing, and I will refer to this below.


On the day of the hearing, I reserved judgment. Before a judgment could be completed, I was informed by counsel in November 2020 that they considered it appropriate to make further submissions to address issues relevant to the present proceedings arising from the decision of this Court Re. New Look Retailers (Ireland) Limited [2020] IEHC 514, delivered by McDonald J. on 14th October, 2020. At the request of counsel, I directed delivery of written submissions on behalf of the parties. Submissions were duly delivered on behalf of the objecting creditor, and the debtor replied by submissions of 14th December 2020. Counsel spoke briefly to the submissions before the court on that date.


As will be apparent from this judgment, some unusual and novel issues arose for decision. Before examining those issues, it is appropriate to set out the context to the application, and the factual basis upon which it is advanced.


The creditor's meeting to consider the debtor's personal insolvency arrangement (‘PIA’) was held on 28th February, 2019. At that time, the debtor was forty-eight years old and married with two dependent children aged eight and two. The debtor is employed by Deerpark Motors Limited as a sales executive. There was no suggestion from the debtor during the hearing that his employment since February 2019 is under threat or that his income has diminished by reason of the pandemic, or that for any other reason he is unable to perform the terms of the PIA as presented to the creditors.


In the PIA, the PIP sets out the circumstances in which the debtor fell into financial difficulty. In 2002, the debtor obtained planning permission for his principal private residence (‘PPR’) and was subsequently approved for a mortgage of €150,000. The PPR was completed in 2005. In his affidavit of 13th December, 2019, the debtor avers that it is a four-bedroom house located in Mallow approximately 35km from Cork City.


The debtor states that his financial difficulties

“…arose due to difficulties encountered when…I set up my own business ‘Keith Cremin Motors’ in or around 2006. At this time I mortgaged my home, which at that point was valued at €420,000.00 in order to purchase equipment for the business. The business was a success initially however as a result of the economic recession, my business suffered and encountered difficulties paying my mortgage along with other leases and loans incurred. I attempted to trade through the difficulties and reduced staff numbers however this was unsustainable and unfortunately, I was forced to cease business in August 2008. I continued to work from home however my income was insufficient to meet all creditors. I attempted to renegotiate payments and reach settlement agreements however I was unable to continue to meet the payments.” [Paragraph 37, affidavit of 13th December, 2019].


The PIA recounts that, in 2010, there was a court hearing in respect of liabilities of the debtor for lease and loan commitments, resulting in a settlement for a set sum for each liability to be paid monthly by him. This continued for three years, but “ due to family circumstances the payments ceased”.

The personal insolvency arrangement

Ultimately the PIP was appointed by the debtor to make a proposal for an arrangement pursuant to the Act. On 5th December, 2018, an application was made to the Insolvency Service of Ireland (“ISI”) on the debtor's behalf for a protective certificate, which subsequently issued from the Circuit Court on 11th January, 2019. The PIP recites in the PIA that he invited creditors to make submissions as to how their debts might be dealt with as part of the arrangement and enclosed a copy of the debtor's prescribed financial statement.


The PIP proposes a PIA of twenty-four months duration. It is envisaged that the debtor would pay twelve monthly contributions of €690 over the first twelve months, and twelve monthly contributions of €866 over the second twelve months. These payments, in addition to cash on hand of €6,168, comprise a total sum of €24,840. It is proposed that, from this sum, fees outlays and irrecoverable VAT of €6,404 would be paid to the PIP, and that the net funds of €18,436 would be distributed to the unsecured creditors, who are owed €173,177 in total. There would thus be a dividend of 11c in the Euro for unsecured...

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2 cases
  • Part 3, Chapter 4 of the Personal Insolvency Acts 2012–2015
    • Ireland
    • High Court
    • 27 August 2021
    ...debtor is unable to pay his or her debts as they fall due”. 72 On 5th February, 2021, I delivered judgment in re Keith Cremin (A Debtor) [2021] IEHC 80. In that case, the debtor's mortgage involved “interest-only” payments of €275 per month, with the capital to be discharged by a bullet pay......
  • Part 3, Chapter 4 of the Personal Insolvency Acts 2012–2015
    • Ireland
    • High Court
    • 16 March 2021
    ...sufficient income to maintain a reasonable standard of living for the debtor and his or her dependents…”. In my decision in re Cremin [2021] IEHC 80, I endorsed the test set out by Baker J as regards the obligation on the PIP in formulating the PIA in relation to affordability as follows: “......
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