Debtor was given ‘substantial’ write-down and debts will be settled over five years
The country’s first proposed debt settlement arrangement has been accepted by creditors at a meeting in Dublin today.
Creditors voted by a majority of more than the required 65 per cent to accept the settlement for a Donegal man with unsecured debts of over €100,000.
In October, the court had granted a protection certificate to the man for 70 days to allow him to come to the arrangement.
The case is the first to be agreed between a debtor and his creditors in Ireland and will be referred to the Insolvency Service of Ireland before going back to Monaghan Circuit Court for final approval. It involved three major banks and three other creditors.
A debt settlement arrangement is one of the three new debt resolution mechanisms introduced under the Personal Insolvency Act 2012. It is designed for individuals who have no prospect of paying off their unsecured debts in the next five years.
Speaking today, the man’s personal insolvency practitioner Ronan Duffy, of McCambridge Duffy, said during the course of the process, the creditors challenged the debtor’s expenditure and the fees being charged to operate the arrangement.
The debtor’s expenditure was “outside the guidelines in one or two areas”, he said, but once the reasons behind that were explained, the creditors accepted that.
Expenditure guidelines were never meant to be a “beans on toast diet” and neither were they meant to provide “a life of luxury”, Mr Duffy said.
He said he believed the banks had “embraced” the personal insolvency process.
Mr Duffy declined to go into detail about the sums involved in the case but said the write-down of debt was “substantial”. He said he expected to be back in court in about 10 days time to get final approval for the arrangement.
The debtor’s name will then be placed on a register held by the Insolvency Service of Ireland. His debts will be settled over a five year term and, if his circumstances improve, he may be required to pay more than currently agreed.
Mr Duffy, who has overseen 5,000 insolvency arrangements in the UK, said the process took 12 weeks compared to four weeks in the UK.
“In the time this has taken, I’ve had 138 arrangements approved in the UK,” he said.
He expects the process will become faster and more streamlined once trust is established with lenders.