Monday 21 January 2019

KBC ruling set to impact on a raft of personal insolvency cases

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Shane Phelan

Shane Phelan

A raft of cases are expected to be affected by a significant ruling in which a judge found a couple had no legal standing to seek a court review of a decision by KBC Bank to veto their personal insolvency arrangement (PIA).

The couple, who have three young children, had been seeking approval for a deal which would have seen debts of €739,000 written down to €360,000, effectively wiping out their negative equity.

They argued the proposal, which was signed off by a personal insolvency practitioner (PIP), gave the bank a better deal than if they had to file for bankruptcy. However, KBC rejected the PIA.

The couple then sought to apply under Section 115A of the Personal Insolvency Acts for a court review of KBC’s decision to veto the proposal.

The bank opposed this, arguing the couple did not have the standing to make the application.

At Dublin Circuit Court Judge Susan Ryan ruled that that Section 115A clearly meant debtors’ PIPs, and not the debtors themselves, had to apply for such reviews.

The ruling has prompted concerns that homeowners in arrears will no longer be able to challenge bank vetoes because PIPs will be reluctant to bring the cases on their behalf as they could be held liable for legal costs if applications fail.

Several other similar cases were adjourned today following the decision, pending the outcome of a likely appeal.

The couple’s barrister, Keith Farry BL, said the case raised a very significant constitutional issue and Judge Ryan gave him liberty to seek an appeal.

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