Appeal can proceed against insolvency plan that allows man to pay €93 towards mortgage each month

A High Court judge has said an appeal can proceed against the approval of a debt restructuring plan allowing a Co Waterford man to make €93 monthly mortgage repayments until he is 97.

Mr Justice Cian Ferriter ruled on Monday that a “live controversy remains” between the parties as to whether the 68-year-old’s personal insolvency arrangement (PIA) should have been approved by the Circuit Court.

The judge had been asked to answer whether an appeal to a PIA approval becomes moot if the scheme has already come into effect and its specified duration has expired.

In the event the objecting creditor is successful, there is “no step that has been taken to date which cannot be undone”, said the judge, adding that Ulster Bank DAC’s appeal should proceed to hearing in the normal way.

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The Circuit Court had overruled the bank’s objection last October by approving the PIA of handyman Paddy O’Regan of Minaun, Cheekpoint, Co Waterford.

The arrangement allowed the 68-year-old man to stay in his single-bedroom home on reduced mortgage payments of just €93.70 a month for an additional 30 years.

Mr O’Regan’s house had a €210,000 value, with just under €98,000 left on his Ulster Bank mortgage. Five years remained on the mortgage when he sought financial help. Relying on the State pension for income, he could not afford the contracted €1,621 monthly repayments.

The Circuit Court was told he would not be able to rent at market rates and was not eligible for the mortgage-to-rent scheme. It also heard his chances of securing social housing would be slim.

Ulster Bank is challenging the Circuit Court’s approval and the validity of a PIA that involves interest-only repayment terms for the full duration of the restructured mortgage.

The PIA was formulated as a three-month arrangement, and the personal insolvency practitioner argued it had expired. The practitioner submitted that the appeal was moot, with the court being asked to “unwind a completed PIA”, the judge noted.

In his ruling on Monday, Mr Justice Ferriter said he believed the practitioner’s arguments on mootness were “misconceived”. If the court were to follow that logic the objecting creditor would be deprived of its constitutional right of appeal of any utility where the PIA is for such a short period that it is not feasible for the appeal to be heard and determined before it expires.

The judge said the objecting creditor was not obliged to apply to the High Court for a stay on the PIA’s activation to avoid it becoming moot. The absence of a stay, he said, did not render the issues between the parties “any less live or real”.

Mr Justice Ferriter said that, if Ulster Bank is successful in its appeal, the High Court would make an order overturning the Circuit Court’s decision to approve the plan.

The amounts paid to the bank under the arrangement would be credited against the amounts otherwise owed if the original terms of the mortgage loan were restored, he added.