High Court confirms challenge to a creditor’s rejection of a Personal Insolvency Arrangement can only be brought by a PIP
In line with a recent decision of Judge Susan Ryan in the Dublin Circuit Court (further details of which can be found here), the High Court has held that only a Personal Insolvency Practitioner (“PIP”) has standing to apply to the Circuit Court for a review of a creditor’s rejection of a Personal Insolvency Arrangement (“PIA”).
The case involved an appeal by a debtor following the rejection of his proposed PIA by a number of his creditors, including Bank of Ireland. At first instance, the Circuit Court dismissed the debtor’s application for a review of the rejected PIA. As a preliminary issue on appeal before the High Court, Bank of Ireland (which was owed €720,000 and held security over the debtor’s family home) argued that the appeal was invalid because it was not brought by the debtor’s PIP.
Agreeing with Bank of Ireland, Ms. Justice Marie Baker held that on a plain reading of the Personal Insolvency (Amendment) Act, 2015 (“the Act”) and the relevant Circuit Court Rules, only a PIP has standing to apply for a review under section 115A of the Act and/or to appeal any finding of the Circuit Court on such a review. While Ms. Justice Baker acknowledged the “practical problems” her decision might have, she also noted that the Court would only exercise its jurisdiction to award costs against a PIP in “exceptional circumstances”. She also noted that section 115A permits a PIP to apply to the Court for a review where there are “reasonable grounds” to do so and while she accepted that any such application would be on behalf of a debtor, she rejected the argument that the PIP’s role is “merely procedural”. Ms. Justice Baker stated that once appointed, a PIP takes on a statutory role and cannot simply act on instructions from a debtor, but must look to achieve an outcome which is “satisfactory to all parties concerned”.
The decision will likely have significant implications for numerous cases which were adjourned pending clarification on this issue. While Ms. Justice Baker’s comments on the question of costs will provide some comfort for PIPs who may be considering applying for a review under section 115A, PIPs will likely remain concerned that, even if they are somewhat protected as regards a costs award against them, if they don’t succeed with their application who is going to reimburse the PIPs costs in mounting the challenge.