Alteration of Personal Insolvency Arrangment was a clarification rather than a substantive change

By: Shane Kiely BL

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High Court allows appeal of Circuit Court ruling that certain alterations made to the proposed Personal Insolvency Arrangement (PIA) of a debtor were amendments to which the provisions of insolvency legislation applied, and that the extended time period provided by statute applied to the proposal, on the grounds that the alteration was not one regarding the substance or meaning of the proposal, but was a clarification, and possibly one that was not essential, as the intention to retain the small plot was apparent from the first proposal, and that the second proposed PIA contained corrections or clarifications within the meaning of applicable legislation.

Personal insolvency - difference between an “amended” proposal for the purposes of s. 111A(3) of the Personal Insolvency Act 2012 to 2015 (“the Act”) and a “modification” for the purposes of s. 111A(5) - section 111A of the Act, as inserted by s. 15 of the Personal Insolvency (Amendment) Act 2015, commenced by SI 414 of 2015, governs engagement by a PIP where a debtor has only one relevant creditor entitled to vote on a proposed Personal Insolvency Arrangement (“PIA”) - amending section replaces the procedures set out in ss. 106, and 108 to 111 of the Act of 2012 by obviating the need, in those circumstances, for the holding of a formal meeting of creditors - appeal from an order of Circuit Court made on 24 May 2017 - on 13 October 2016 a Protective Certificate issued to the debtor in accordance with s. 95(2)(a) of the Act - first proposed PIA contained a number of inconsistencies - second proposed PIA was prepared and served on creditor - no response for the purposes of s. 111A(6)(a) was served within the 14 day time limit provided therein, and the PIP therefore treated the proposed PIA as having been approved on 21 December 2016 by virtue of s. 111A(7)(b), and thereafter issued a “Notice of Outcome” to the creditor in accordance with the statutory procedures - creditor brought an application pursuant to s. 112(3) of the Act, objecting to the coming into force of the second proposed PIA on the grounds that time had not run against it for the purposes of the Act, as an amended proposal had been served within the meaning of s. 111A(3) and the time for delivery of the vote of the creditor had been extended for a period of seven days in accordance with s. 111A(6)(b) - debtor argues that the second proposed PIA was not an amended proposal but that the alterations were modifications rectifying an error or addressing an ambiguity in the first proposal - round on which the creditor argues that the second proposed PIA was an amended PIA governed by s. 111A(3) concerns the details of the small plot, an asset comprising 0.1322 hectare of land, circa 0.33 acres, in the joint names of the debtors and held free from encumbrances, and in respect of which the creditor argued, and the Circuit Court accepted, the second proposed PIA provided for a different treatment amounting to an amendment - an alteration or modification of a proposed PIA must fall to be characterised either as an amendment for the purposes of s. 111A(3) or a modification for the purposes of section 111A(5) - analysis of two versions of PIA - terms of the statutory form may, because of its format, create some ambiguity - alteration was clarification within meaning of s.111A(5) - Circuit Judge was in error - appeal allowed.

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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