High Court refuses to approve personal insolvency of car salesman

The High Court refused to approve a personal insolvency deal that would have allowed a car sales manager to write off around € 190,000 in debt, mostly owed to financial institutions.

The PIA was requested in respect of Keith Cremin, Subulter, Cecilstown, Mallow, Co Cork. He owed money to Pepper Finance Corporation DAC, which opposed the PIA.

Its other creditors are the Bank of Ireland, Everyday Finance and the Revenue Commissioners.

Fault

In a judgment released this week, Judge Mark Sanfey ruled that it would be unfair to impose a PIA, involving a very substantial write-off of a performing loan in the absence of default, on the opposing creditor.

Mr Cremin has no other urgent insolvency issues and the PIA request, made by a personal insolvency practitioner (PIP), was “premature” at best, he said.

Confirming the Circuit Court’s refusal to approve the PIA in 2019, the judge said he hoped the parties would consider working together to find a solution to Mr Cremin’s financial difficulties.

The court heard that Mr Cremin (49), married with two dependent children, encountered financial difficulties when the car company he founded in 2006 was in difficulty due to the economic recession of 2008 and finally ceased operations in August 2008.

He had taken out loans to buy equipment for the business. He tried to settle his debts, but requested a PIA because he was unable to meet the payments. Under the proposed PIA, lasting 24 months, he would have paid monthly contributions of between € 690 and € 866.

These payments, along with the cash on hand, would have seen a net payment of around € 18,000 made available to his creditors who would have received 11 cents in euros.

Refunds

In addition, Mr. Cremin is said to have kept and continued to reimburse only the interest on his mortgage on his private principal residence until the end of the 24-month term of the PIA.

At the end of this period, it was proposed that he would resume making principal and interest payments on the mortgage, which would have been extended.

The mortgaged house is a four bedroom house valued at € 185,000, of which approximately € 300,000 remains to be paid.

A principal repayment due on the mortgage is due to Pepper in 2025. Pepper, who acquired Mr Cremin’s mortgage from Ulster Bank, opposed the PIA. Represented by Niall O hUiggin,

Pepper argued that he would suffer a significant write-off of what was owed in the absence of Mr. Cremin’s default in loan repayments. In his ruling, the judge said he acknowledged Mr Cremin was insolvent, had acted in good faith and was trying to get his finances in order.

However, Pepper’s complaints about the relevance of PIA were “justified,” the judge said. Mr Cremin was on the terms of his mortgage payments with Pepper, he said.

While he had other debts, there was no evidence of pressure exerted on him by the creditors concerned to collect them, the judge added. Under any circumstance, the PIA should not be approved, he argued.

Maria J. Book