High Court refuses to approve personal insolvency for car salesman

The High Court has declined to approve a Personal Insolvency Arrangement that would have allowed a car sales executive write off about €190,000 in debts, mainly owed to financial institutions.

The PIA was sought in respect of Keith Cremin, Subulter, Cecilstown, Mallow, Co Cork. He owed money to Pepper Finance Corporation DAC, which opposed the PIA.

His other creditors are Bank of Ireland, Everyday Finance and the Revenue Commissioners.

Default

In a judgment published this week, Mr Justice Mark Sanfey held it would be unfair to impose a PIA, involving a very substantial write off of a performing loan where no default arises, on the objecting creditor.

Mr Cremin has no other pressing insolvency issues and the application for a PIA, formulated by a Personal Insolvency Practioner (PIP), was, at best, “premature”, he said.

Upholding the Circuit Court’s 2019 refusal to approve the PIA, the judge said he hoped the parties would consider working together to find a solution to Mr Cremin’s financial difficulties.

The court heard that Mr Cremin (49), a married father of two dependent children, got into financial difficulty when the motor business established by him in 2006 struggled due to the economic recession in 2008 and eventually ceased trading in August 2008.

He had taken out loans to purchase equipment for the business. He tried to deal with his debts, but sought a PIA because he was unable to meet payments. Under the proposed PIA, to be of 24 months duration, he would have made monthly contributions of between €690 and €866.

These payments, plus cash on hand would have seen a net payment of approximatel €18,000 being made available to his creditors who would have got 11c in the euro.

Repayments

In addition, Mr Cremin would have retained and continued to make interest only repayments on his mortgage of his principal private residence until the end of the 24-month duration of the PIA.

At the end of that period, it was proposed he would resume making capital and interest payments on the mortage, which would have been extended.

The mortgaged home is a four-bedroom house valued at €185,000, on which some €300,000 remains outstanding.

A repayment on the capital due on the mortgage is due to Pepper in 2025. Pepper, which acquired Mr Cremin’s mortgage from Ulster Bank, opposed the PIA. Represented by Niall O hUiggin,

Pepper argued it would suffer a significant write off of what was owed when there was no default by Mr Cremin in repayments on the loan. In his decision, the judge said he accepted Mr Cremin was insolvent, had acted in good faith, and was attempting to put his finances in order.

However, Pepper’s complaints in relation to the appropriateness of the PIA were “justified,” the judge held. Mr Cremin was in compliance with the terms of his mortgage repayments with Pepper, he said.

While he had other debts, there was no evidence of pressure being exerted on him by the creditors concerned to collect those, the judge added. In all the circumstances, the PIA should not be approved, he held.