Hotel owner pays €2,000 to walk from €3.2m debt
A former hotel owner had debts of €3.2m written off and secured a "clean break divorce" in return for a payment of just €2,000.
The deal, which also involved him giving up his stake in the family home, was cut as part of a personal insolvency arrangement approved by the High Court earlier this week.
Mr Justice Denis McDonald approved the arrangement, which also had the support of creditors. Most of the money was owed to Bank of Ireland.
The case is significant as it could serve as a precedent for other divorcing couples faced with large debts.
The former hotelier, a father of three, and his wife are separated and in the process of getting a divorce.
They previously operated their hotel together and had significant joint debts secured on the property.
Their marriage broke down several years ago, then their business failed.
The husband moved out of the family home, where his wife and children still live. He now lives with a new partner.
Advice was sought from solicitors and accountants on how to find a resolution to the debt and marriage breakdown issues.
But this proved difficult and at one point the man contemplated bankruptcy.
According to the arrangement, devised by Limerick-based personal insolvency practitioner Maurice Lenihan and presented in court by barrister Keith Farry, the man had secured debts of €257,000, with sums owed to Bank of Ireland, the Revenue Commissioners and a food wholesale company.
He also owed unsecured creditors €2.95m, the vast majority of which was due to the bank.
Under the arrangement, the man must pay just €2,000 to fully settle debts owed to unsecured creditors.
He consented to transferring his 50pc interest in the family home to his wife and will be discharged of his obligations in respect of two mortgages on the property.
His wife is to assume responsibility for the outstanding mortgage loans of €98,500.
Judgment mortgage debts of €121,000 owed to the Revenue and €37,600 owed to a food distribution company are to be paid by the parents of the former hotelier's wife once the 50pc interest is transferred to their daughter.
Mr Lenihan said it was fortunate the woman's parents were in a position to help out financially.
He said the agreement was "effectively a debt resolution and divorce rolled into one" and that it "completely untangled" the former couple's financial affairs.
"Now the only issues they have to deal with on the divorce end of it are practical matters such as access to the children," said Mr Lenihan.