Brendan Burgess
Founder
- Messages
- 52,118
I think it's worth looking at these [broken link removed] as a guide to see how the ISI is thinking.
1 . J O H N ’ S ST O RY
John is an IT consultant who earns a monthly net income of €3,510. He is married to Mary who does not work outside of the home in order to take care of their children. They have two children at Primary School (aged 7 and 8). They have a family car, which is required for John’s work, and is valued at €5,000. John bought his Principal Private Residence (PPR) ten years ago. It is worth €250,000, but the outstanding mortgage is €300,000. John owns 3 acres of agricultural land, which is valued at €10,000 and has no loans against it. John also has a total of €100,000 in unsecured debt consisting of a Personal loan (€75,000) and credit card debts (€25,000). His monthly debt commitments are as follows:
• Mortgage repayment on his PPR of €2,222
• Unsecured debt repayments of €1,500
John has co-operated with his bank under the Central Bank Code of Conduct on Mortgage Arrears in relation to his PPR for the last six months, but has been unable to agree a sustainable repayment solution. John is unable to pay his debts in full as they fall due and acknowledges he is insolvent.
John meets with a Personal Insolvency Practitioner (PIP) and provides full details of his financial circumstances so the PIP can understand his financial position.
Net income|€3,510
Reasonable living costs|€1,689
Available for debt servicing|€1,821
a) The PIP is satisfied that John meets all the eligibility criteria for a PIA, and submits an application for a Protective Certificate (PC) to the Insolvency Service of Ireland (ISI) on John’s behalf, including a Prescribed Financial Statement (PFS).
b) ISI and Court are satisfied with John’s application and issue a PC. John’s name, address, year of birth, and date of issue of the PC will be added to the Public Register of PCs on the ISI website. The PC offers John and his assets protection from legal proceedings by his creditors while he is applying for a PIA.
c) The PIP has 70 days to develop a proposal, get it voted by the creditors and submitted to the Court for assessment.
d) John agrees to the PIA proposal developed by the PIP (Details of potential PIA solution set out below in point 5).
e) Creditors representing 65% or more of John’s total debt participating at the creditors’ meeting agree to the proposal (i.e. first threshold needed for creditors’ approval). This includes creditors representing 50% or more of John’s secured debt (i.e. second threshold needed for creditors’ approval), and creditors representing 50% or more of John’s unsecured debt (i.e. third threshold needed for creditors’ approval) (see appendix A-voting rights table for more information).
f) The PIP records the creditors’ meeting results and sends them to the ISI and each of John’s creditors. No creditor appeals at any point of the process.
g) The ISI and the Court carry out final reviews of John’s case and approve the PIA.
h) John’s details are placed on a Public Register of Personal Insolvency Arrangements. (This includes his name, address, year of birth and the date of coming into effect of the PIA).
5. P O T E N T IA L P IA S O L U T I O N FO R J O H N P R O P O S E D B Y P I P
The PIP identifies €1,821 as the long-term sustainable monthly repayment on John’s PPR mortgage. To achieve this, the PIP proposes a term extension of five years. The term of the John’s mortgage cannot be extended further due to John’s age. The PIP also proposes that the land be sold immediately and the proceeds used to repay a final settlement of the amounts due to the unsecured creditors.
John’s monthly income and expenses after PIA restructuring
net monthly income|€3,510
Total Set Costs|€1,689
Rescheduled mortgage payment|€1,821
Available to unsecured creditors|0
John has now enough income for Reasonable Living Expenses (including mortgage). There is
€10,000 available to unsecured creditors from the proceeds of the sale of the land.
For the purposes of this scenario, it is estimated that the PIP’s fee is split between John’s secured and unsecured creditors. Therefore, John’s unsecured creditors will receive €9,000 on a proportionate basis as part of the PIA.
Given that the unsecured creditors will avail of the €9,000 as a lump-sum settlement for John’s unsecured debts, and considering John has no repayment capacity for the remaining unsecured debt, this PIA is a short-term arrangement, which will last four months1 . The PIA
will be terminated once the land is sold and all parties have been paid.
6. J O H N ’ S P O S IT IO N A F T E R ME E T I N G H I S D UT IE S A N D O B L IGA T IO N S UN D E R T H E PI A
a) PPR Mortgage is sustainable.
b) Unsecured creditors get €9,000, a return of 9% based on amounts outstanding at the date of the Protective Certificate.
c) John’s remaining unsecured debts of €91,000 will be discharged at the end of the
term of the PIA.
d) John is solvent.
1 . J O H N ’ S ST O RY
John is an IT consultant who earns a monthly net income of €3,510. He is married to Mary who does not work outside of the home in order to take care of their children. They have two children at Primary School (aged 7 and 8). They have a family car, which is required for John’s work, and is valued at €5,000. John bought his Principal Private Residence (PPR) ten years ago. It is worth €250,000, but the outstanding mortgage is €300,000. John owns 3 acres of agricultural land, which is valued at €10,000 and has no loans against it. John also has a total of €100,000 in unsecured debt consisting of a Personal loan (€75,000) and credit card debts (€25,000). His monthly debt commitments are as follows:
• Mortgage repayment on his PPR of €2,222
• Unsecured debt repayments of €1,500
John has co-operated with his bank under the Central Bank Code of Conduct on Mortgage Arrears in relation to his PPR for the last six months, but has been unable to agree a sustainable repayment solution. John is unable to pay his debts in full as they fall due and acknowledges he is insolvent.
John meets with a Personal Insolvency Practitioner (PIP) and provides full details of his financial circumstances so the PIP can understand his financial position.
Reasonable living costs|€1,689
Available for debt servicing|€1,821
a) The PIP is satisfied that John meets all the eligibility criteria for a PIA, and submits an application for a Protective Certificate (PC) to the Insolvency Service of Ireland (ISI) on John’s behalf, including a Prescribed Financial Statement (PFS).
b) ISI and Court are satisfied with John’s application and issue a PC. John’s name, address, year of birth, and date of issue of the PC will be added to the Public Register of PCs on the ISI website. The PC offers John and his assets protection from legal proceedings by his creditors while he is applying for a PIA.
c) The PIP has 70 days to develop a proposal, get it voted by the creditors and submitted to the Court for assessment.
d) John agrees to the PIA proposal developed by the PIP (Details of potential PIA solution set out below in point 5).
e) Creditors representing 65% or more of John’s total debt participating at the creditors’ meeting agree to the proposal (i.e. first threshold needed for creditors’ approval). This includes creditors representing 50% or more of John’s secured debt (i.e. second threshold needed for creditors’ approval), and creditors representing 50% or more of John’s unsecured debt (i.e. third threshold needed for creditors’ approval) (see appendix A-voting rights table for more information).
f) The PIP records the creditors’ meeting results and sends them to the ISI and each of John’s creditors. No creditor appeals at any point of the process.
g) The ISI and the Court carry out final reviews of John’s case and approve the PIA.
h) John’s details are placed on a Public Register of Personal Insolvency Arrangements. (This includes his name, address, year of birth and the date of coming into effect of the PIA).
5. P O T E N T IA L P IA S O L U T I O N FO R J O H N P R O P O S E D B Y P I P
The PIP identifies €1,821 as the long-term sustainable monthly repayment on John’s PPR mortgage. To achieve this, the PIP proposes a term extension of five years. The term of the John’s mortgage cannot be extended further due to John’s age. The PIP also proposes that the land be sold immediately and the proceeds used to repay a final settlement of the amounts due to the unsecured creditors.
John’s monthly income and expenses after PIA restructuring
Total Set Costs|€1,689
Rescheduled mortgage payment|€1,821
Available to unsecured creditors|0
John has now enough income for Reasonable Living Expenses (including mortgage). There is
€10,000 available to unsecured creditors from the proceeds of the sale of the land.
For the purposes of this scenario, it is estimated that the PIP’s fee is split between John’s secured and unsecured creditors. Therefore, John’s unsecured creditors will receive €9,000 on a proportionate basis as part of the PIA.
Given that the unsecured creditors will avail of the €9,000 as a lump-sum settlement for John’s unsecured debts, and considering John has no repayment capacity for the remaining unsecured debt, this PIA is a short-term arrangement, which will last four months1 . The PIA
will be terminated once the land is sold and all parties have been paid.
6. J O H N ’ S P O S IT IO N A F T E R ME E T I N G H I S D UT IE S A N D O B L IGA T IO N S UN D E R T H E PI A
a) PPR Mortgage is sustainable.
b) Unsecured creditors get €9,000, a return of 9% based on amounts outstanding at the date of the Protective Certificate.
c) John’s remaining unsecured debts of €91,000 will be discharged at the end of the
term of the PIA.
d) John is solvent.