A couple and their two young children can stay in their family home after a High Court judge dismissed a fund’s objection to their proposed personal insolvency arrangements (PIAs).
In a significant judgment rejecting the fund’s claims of unfair prejudice by the arrangements, Ms Justice Marie Baker said the test for unfair prejudice required seeing the fund in light of its position as a “fund”, not a financial lender.
The test must be seen in the context of investment returns, not the costs of the capital needs of the creditor in the future, she said.
Shoreline Residential DAC, an investment fund, is owed about €323,000 having acquired loans from Irish Bank Resolution Corporation.
Its debt is secured on the couple’s home, valued at about €190,000, and their PIAs provide the €323,000 debt be written down to €190,000.
On foot of objections from Shoreline, the Circuit Court refused last February to approve interlocking PIAs for the couple as proposed by their Personal Insolvency Practitioner.
In her judgment on Wednesday allowing the appeal by the couple represented by Keith Farry against the Circuit Court refusal, Ms Justice Marie Baker said two primary matters arose for consideration.
Remaining mortgage
The first was the PIAs’ proposal to extend the remaining mortgage term of 18 years and two months to 27 years, when the husband will be 79 and likely to have retired from his part-time employment, and his wife will be 68.
The second matter was the proposal to fix interest for the entire term at a rate of 3.65 per cent.
During the six-year period of the PIA, interest-only payments would be made on the mortgage after which the interest rate would remain at 3.65 per cent over the remaining term of the mortgage.
Shoreline argued the proposed PIAs were unsustainable and would not return the debtors to solvency. It also claimed the PIAs unfairly prejudiced the fund’s interests in proposing an extension of credit on terms which, the fund argued, departs radically from those generally available to borrowers from lenders in the Irish market.
Ms Justice Baker said the couple lives in a “modest family home” and had a joint monthly income of some €3,112 with set costs, based on reasonable living expenses guidelines of the Insolvency Service of Ireland, of €1,835.
Their PIAs also provided for monthly mortgage repayments of €1,080, plus €106 mortgage protection insurance.
