A Supreme Court ruling involving a Co. Wexford farmer and the vulture fund, Promontoria Oyster DAC, could deliver a new route for farmers to work out debts while retaining their land, according to legal experts.
Promontoria Oyster DAC had appealed the order of the High Court – on an appeal from the Circuit Court – relating to a Personal Insolvency Arrangement (PIA) granted to Co. Wexford farmer, Fergus O’Connor (the debtor).
In a judgement handed down by Justice Baker it was noted Promontoria Oyster DAC (the appellant) had objected to the PIA on the basis that it claimed that O’Connor did not meet the “threshold requirement” under The Personal Insolvency Act 2012, that he was “insolvent”.
Land
The vulture fund had argued that the Co. Wexford farmer had “land, the value of which exceeds his debt” and “the sale of these lands would generate ample funds to repay the debts and restore the debtor to solvency”.
However previously in the Circuit Court it had been held by Judge Enright that O’Connor was “insolvent for the purposes of the act and that the agricultural land belonging to him was not a readily realisable asset” for the purposes of assessing his insolvency.
A High Court appeal in relation to this was dismissed – it was stated that to compel O’Connor to dispose of certain assets including land and and his principal private residence would “result in the loss of his livelihood”.
However the Supreme Court granted leave to appeal the decision of the High Court in that Circuit Court appeal.
Loans
In the Supreme Court judgement handed down by Justice Baker on November 30, it was outlined that O’Connor’s liabilities to Promontoria Oyster had arisen from two separate loan facilities secured by him originally from Ulster Bank and then since acquired by the vulture fund.
According to the judgement Promontoria Oyster holds security over some of the farmer’s lands including his private residence. He also had a debt owed to his mother which is secured against some of his lands.
“There are trade creditors arising from the debtor’s farming enterprise,” it was also noted.
O’Connor secured approval for the PIA from the Circuit Court in March 2022, which Promontoria Oyster appealed in the same month and the PIA “remains in effect”.
Assets
The PIA valued O’Connor’s assets at €1,837,100 and his total debts at €1,119,402.22 which leave a “net asset position of €717,697.77.”
The Co. Wexford farmer’s debt to Promontoria Oyster was listed at €874,430.46 and his debt to his mother was listed at €217,932.
According to the judgement O’Connor is “the registered owner of eleven folios all in Co. Wexford” including his home, a rental property and agricultural land totaling 190 acres.
“In addition to his real property assets the PIA valued livestock, three motor vehicles and farm machinery at €114,950,” the judgement also stated.
PIA
Under the terms of the PIA O’Connor must pay his liabilities to Promontoria Oyster over a period of more than 30 years.
The judgement also set out that the PIA is for 36 months and “does not require” O’Connor to dispose of any property assets “or his chattels and items of personalty”.
“Whilst there is no write down of any debt, the extension of the term of the loan owed to the appellant (Promontoria Oyster) is significant, as the secured creditor has lost the benefit of immediate recovery, or recovery within a short period time,” the judgement also stated.
According to the judgement the central question in the the appeal is whether the debtor (O’Connor) is “insolvent with the meaning of the act”.
“The appellant argues that the debtor is not insolvent because the value of his assets exceeds his liabilities and that because the value of his assets far exceeds his liabilities, he cannot be in the class of persons for whom the legislative scheme was enacted.
“The debtor could dispose of assets and thereby discharge his liabilities in full and remain a person of substantial net worth,” the judgement outlined.
High Court
In the 58 page judgement delivered by Justice Baker she stated that the “PIA was adequately assessed in the manner for what the act provides” and that O’Connor was insolvent.
However the Supreme Court ruled that the “matter” should return to the High Court for assessment.
In the judgement from Justice Baker it was stated that she was “not persuaded” that the High Court properly assessed the PIA “in the performance of its statutory role” and that the “balancing of competing rights was not done”.
“We cannot ourselves make an assessment of the fairness of the PIA.
“I would therefore remit the matter for assessment to the High Court on that aspect of the appeal,” the judgement outlined.