A High Court judge has said he is minded to approve a personal insolvency arrangement (PIA) for musician Frank McNamara and his wife, barrister Theresa Lowe, to assist them with debts of €3.7m, subject to clarification of certain issues.

Financial fund Tanager DAC, which is owed €2.26m by the couple, had opposed the application.

The debt is secured against the couple's family home in Dunshaughlin, Co Meath, which is valued at €550,000.

The couple also owes money to parties including Bank of Ireland, Banco de Sabadell SA, and Revenue, which are all unsecured debts.

In a lengthy and detailed judgement, Mr Justice Denis McDonald said that he was of the opinion that the applications to allow the PIA should be allowed once certain matters concerning Mr McNamara's inheritance from his parent's estate is clarified.

Under the proposed scheme monies from Mr McNamara's inheritance are to be used to fund the arrangement.

The issues of concern, the judge said, would have to be addressed in a sworn statement to the court.

The judge added that he was not prepared to allow matters to proceed any further until the affidavit addressing these issues is presented to the court.

Mr McNamara, 59, worked as musical director on RTÉ's The Late Late Show for 20 years while Ms Lowe, 56, was a television presenter before qualifying as a barrister.

In his judgment, Mr Justice McDonald noted that they remortgaged and sold properties in an attempt to escape what they saw as temporary financial difficulties.

However, Mr McNamara, who said he had been working in the United States earning a high income, believed he would be able to create enough income to work out their debts.

He had claimed he is owed some $1.2m in royalties for his work.

Under the proposed arrangement, the couple would continue to pay a mortgage to Tanager of €550,000 on their home from a total income of €5,600 per month.

A lump-sum payment of €100,000 would also be made, along with a promise of €30,000 from a life insurance policy when it matures in seven years.

The money will come from a €181,000 inheritance from Mr McNamara's parents' estate and also from the sale of five acres of land next to their home. 

The couple, represented by Keith Farry BL, had argued that the creditors, under the personal arrangement, would fare better than in a bankruptcy.

He claimed that Tanager appeared to want bankruptcy and was not interested in long-term structuring of debts, he said, adding that Tanager's strategy is to realise the debt in as short a period of time as possible.

Tanager, counsel added, also failed to recognise that the arrangement it had inherited from Bank of Scotland Ireland in respect of the McNamara's was in the nature of a long- term arrangement.

They had continued to make payments off their debt and would continue to do so under the arrangement, he said, and this arrangement would ensure a return to solvency for the couple.

Tanager made a wide-ranging notice of objection to the proposal claiming there was a lack of explanation in relation to questions raised by the fund about their debts.

It also complained that the proposed write-off of debt was so significant that it represented a clear unfair prejudice to it.

Tanager said the only circumstances where it is prepared to offer a write-down to market value occurs when the secured property is surrendered or voluntarily sold.

Tanager also argued that the royalties claim is a 16-year-old debt to Mr McNamara which has nothing to do with his current situation.

In his ruling, Mr Justice McDonald noted that if the couple was to become bankrupt Tanager would realise 22 cent in the euro, whereas under the proposed arrangement it would receive 27 cent in the euro.

Unsecured creditors would likely recover 3.3 cent in the euro, while under the proposed arrangement they will recover 5 cent in the euro.

In the circumstances, he said he was satisfied to reject Tanager's objections to the proposal.

However, issues over Mr McNamara's inheritance needed to be clarified, the judge said.

Tanager had raised objections based on discrepancies in documents filled out by Mr McNamara.

The documents in question are a Standard Financial Statement (SFS) - a document used to assess the financial situation of a borrower in arrears - completed by him in January 2016.

The other was a Prescribed Financial Statment (PFS), which is a document designed to help determine what insolvency arrangement is most suitable for an applicant, completed by Mr McNamara in October 2016.

The SFS stated that Mr McNamara's share in his parent's house was approximately €500,000 and that he was in receipt of monthly rent of €800 from the property.

The judge said the PFS suggests that the value of the inheritance is €182,000 which is significantly less than €500,000 and says nothing about any rental income.

He said it was difficult to understand why there was such an obvious discrepancy between both documents.

The judge said that in the circumstances Mr McNamara is obliged to explain this matter.

The proper function of the system requires full disclosure of assets and liabilities to assess a debtor’s true financial position, he added.

It was important that the position is clarified by Mr McNamara in an affidavit, the judge said, adding that there may well be a very good explanation for the difference in value between the two documents.

While the issue was properly raised by Tanager, the judge said he did not see the discrepancies as a reason to dismiss the applications given the consequences for the couple.

An adequate explanation for the differences should result in the disposal of the remaining grounds of objection raised by Tanager, he said.

The matter will return before the court next month.