High Court will not challenge banks who unresonably reject PIAs/DSAs

[Jim Stafford]

The High Court recently gave its judgment in the Eric O'Callaghan case where the debtor, who was self-adjudicating for bankruptcy, asked the High Court to consider if the bank had acted unreasonably in voting against his PIA proposal. The judgment may be read at the following link:

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/3458a907ed3b71e680257e19004987d2?OpenDocument

Significantly, the High Court stated that, in a case where a debtor is self-adjudicating for bankruptcy, it will not question whether a bank acted unreasonably or not in rejecting a PIA. The judge stated that:

"I wish to state that I have approached this case on the assumption that the petitioner is correct in his argument that Ulster Bank behaved unreasonably in rejecting the proposed PIA in the circumstances. I have made no such determination and I expressly decided the case as a matter of law. This judgment is not to be taken as in any way endorsing the criticisms advanced by the petitioner against Ulster Bank. Ulster Bank is entitled to have regard to its own legitimate commercial interests in its dealings with debtors."

The judgment firmly allows creditors to vote whatever way they wish in PIAs and DSAs.

Given the above judgment, I see no merit in the Government establishing any type of "appeals mechanism" to deal with creditors who act "unreasonably" in PIAs/DSAs. The High Court has decided that creditors may act whatever way they choose.

Jim Stafford

 

[Bronte]

The judge stated that:

This judgment is not to be taken as in any way endorsing the criticisms advanced by the petitioner against Ulster Bank. Ulster Bank is entitled to have regard to its own legitimate commercial interests in its dealings with debtors."

I see no merit in the Government establishing any type of "appeals mechanism" to deal with creditors who act "unreasonably" in PIAs/DSAs.

That's only proper order from the Judge and I'd totally agree with his views.

Meanwhile the Government is on a vote getting exercise creating another quango instead of fixing the broke insolvency system they already delivered and tweaked about 3 times now. They know full well a Quango will not be able to force banks to do anything they don't want to do.

 

[demoivre]

The judgment firmly allows creditors to vote whatever way they wish in PIAs and DSAs.

Given the above judgment, I see no merit in the Government establishing any type of "appeals mechanism" to deal with creditors who act "unreasonably" in PIAs/DSAs. The High Court has decided that creditors may act whatever way they choose.

Jim Stafford

I see merit in an appeals board and it should have statutory power. Banks should not be allowed veto a PIA, under the 65% rule, where the borrower going bankrupt to deal with a shortfall after the house is repossessed and sold, results in a greater loss to the bank.