High Court revokes debt write-off over undisclosed Lanzarote villa

The High Court has terminated personal insolvency arrangements (PIAs) that wrote off multimillion-euro debts of a former accountant and his wife who did not disclose that they owned a Lanzarote villa.

Registered solemniser and psychic medium Thomas Colton (46) and his wife, Linda Colton (46), of Celbridge, Co Kildare, had their debt plans approved by the High Court in February.

The deals reduced Mr Colton’s €4.3 million debts by €2.7 million, while Ms Colton had an interlocking arrangement writing off €2 million. In exchange for the write-offs, the Coltons were to pay unsecured creditors €10,200 and they were allowed to keep their €640,000 family home.

Their personal insolvency practitioner (PIP), Eugene McDarby, represented by barrister Keith Farry, subsequently applied to the court for an order revoking the PIAs because of the couple’s failure to disclose the property transactions.

On Instagram I see the body of a Palestinian toddler, an ad for a wetsuit, Oprah talking

---

Here’s hoping household chores don’t include having to ask men to do them ‘properly’

---

Irish Olympian Jack Woolley: ‘We’ve sat in saunas and not drank water for two days’

---

Mark Moriarty: two 15-minute meals made easy, with a few simple tricks

---

In a judgment delivered on Monday, Mr Justice Alexander Owens said a “spending spree” on the Spanish property, with accompanying renovations, said to be worth €400,000, was taking place while the couple’s PIP was formulating proposals for their debt plan.

The evidence shows “serious failures” by the Coltons to disclose information relating to the true nature of their means, said the judge. It is “most unlikely”, he said, that the court would have confirmed the PIAs if the information now available had been revealed at the time.

Following approval of the PIAs, it emerged that the Coltons, using the Irish versions of their names, were registered with Spanish land title authorities as owners of the Lanzarote villa and that they had borrowed €178,500 from a Spanish bank.

Had the information been disclosed, it is “likely” the arrangements would have contained terms obliging the debtors to sell the Lanzarote property to repatriate net proceeds for a lump-sum payment to creditors, the judge said.

The pair had disclosed monthly net incomes totalling €5,200 from running a spiritualist wedding company. The Coltons subsequently submitted that the villa was bought in trust for the company as an investment of wedding deposits and it was not treated as company income for accounting purposes, said the judge.

Mr Justice Owens said the financial affairs of the company were “one and the same thing” as that of the Coltons and they were obliged to make full disclosure of these matters to their PIP. Even taking a “benign” view, the judge said, the Coltons were “seriously remiss” in not advising their PIP of the property transactions.

The judge concluded it was “appropriate and proportionate” to terminate the PIAs. He said the significant omissions “misled” a secured creditor into agreeing to arrangements that caused “material detriment” to it.

While he has jurisdiction to direct a variation of the arrangements, the judge said, the non-disclosures are “so significant” it is impossible to conclude they deserve a second chance. Further, any change would be of such significance that the PIAs would be, in substance, new arrangements, he added.

The PIA system is conditioned on debtor honesty and full disclosure, he said. Meaningful judicial oversight is “set at nought” if courts do not uphold these standards, which are designed to safeguard creditors, he said.

PIAs must provide a return for creditors that a debtor’s means reasonably permit, Mr Justice Owens said.