PIA Appeal to be instituted by Debtor or PIP?
Section 115A of the Personal Insolvency Acts (the “Acts”) requires that any appeal under the Acts is to be brought by the debtor’s Personal Insolvency Practitioner (the “PIP”). Most Personal Insolvency Arrangement (“PIA”) Appeals were initially commenced by the relevant PIP but in recent times some debtors have commenced such appeals in their own name. This is most likely an attempt by PIPs to avoid any adverse cost orders due to the fact that the legal aid scheme covers the debtor’s costs but not the PIP’s.
Two recent Circuit Court decisions of Judge Ryan and Judge Lambe have highlighted the importance of who brings the Motion in a PIA Appeal. Judge Ryan in Dublin Circuit Court ruled on Wednesday, 6 September 2017 that Section 115A of the Personal Insolvency Acts allowed only PIPs and not debtors in their own capacity to apply for a review of a PIA rejection. In this case, the PIA related to a couple with three young children in County Dublin. Their family home is mortgaged to KBC Bank for €740,000. The house is currently in negative equity valued at €360,000. The PIA would have meant that KBC would have eventually received €360,000 of the €740,000 mortgage debt. The Court had allowed the debtor time to bring an application to substitute the PIP as the moving party but this was not taken up by the PIP. A similar decision was arrived at by Judge Lambe in Tullamore Circuit Court last month.
Should creditors refuse to allow debtors to substitute in the PIP as the moving party or should the PIP refuse to be substituted in, then such Motions will be struck out by the Courts and the debtor may be eligible to apply for a new Protective Certificate from the Courts within a period of twelve months and re-engage in PIA discussions with their creditors. Alternatively, a legislative amendment will be required to either allow debtors to bring their own Motion or to indemnify PIPs that bring such Motions on a debtor’s behalf.
Additionally, an appeal by a debtor to the High Court of an unsuccessful Section 115A application is to be decided by Judge Baker in October 2017. Should the High Court affirm the Circuit Court decisions then these rulings will certainly raise valid concerns for debtors that PIPs may refuse to pursue such reviews given the legal costs they could subsequently be exposed to should the review not be successful.