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

The PIA was sought in respect of Keith Cremin of Subulter, Cecilstown, Mallow, in Co Cork.

He owed money to Pepper Finance Corporation DAC, which opposed the PIA, Bank of Ireland, Everyday Finance and the Revenue Commissioners.

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

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

Upholding a decision made by the Circuit Court which in 2019 also declined to approve the PIA, the judge added that he hoped the parties would consider working together to find a solution to Mr Cremin's financial difficulties. 

The court heard that Mr Cremin, a married man who is 49 years of age with two dependent children, got into financial difficulty when the motor business he established in 2006 struggled due to the economic recession in 2008.

It eventually ceased trading in August of 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, which was to be of 24 months duration, Mr Cremin would have made monthly contributions of between €690 and €866.

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

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 that he would resume making capital and interest payments on the mortgage, which would have been extended.

That property, a four-bedroom house valued at €185,000, where over €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 Ó hUiggin Bl, Pepper argued that it would suffer a significant write off of what was owed in a situation where there was no default in repayments on the loan by Mr Cremin. 

In his decision the judge said he accepted that 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, he said, was in compliance with the terms of his mortgage repayments with Pepper.  

While he had other debts there was no evidence of any pressure being exerted on him by the creditors concerned to collect those debts, the judge added.

In all the circumstances the court said the PIA should not be approved.