A plan to write off more than €4 million of a salesman’s debt has been approved by the High Court.
Despite objections from an unsecured creditor, Mr Justice Mark Sanfey said he was satisfied it was appropriate to confirm the arrangement for Dublin-based David Langan, who had debts totalling €5.7 million.
The judge said the approval does not constitute an unfair prejudice against Promontoria Aran Limited, which will receive just 0.48 per cent of the more than €4 million it was owed.
Promontoria, which had purchased loans Ulster Bank gave to Mr Langan’s companies, would have received 0.27 per cent of its claim in a bankruptcy scenario, the court heard.
Mr Langan, a single man with no dependents, established a furniture business in 1986 and had some other companies that were severely affected by the recession and wound up in 2009.
The arrangement, put together by insolvency practitioner Gary Digney, of FPM, will see secured creditors receive 67 per cent of what they were owed, compared to 62 per cent if Mr Langan was to be made a bankrupt. All secured creditors — Bank of Ireland, Permanent TSB, AIB and a solicitor — voted in favour of the arrangement.
Mr Langan made regular payments to Bank of Ireland for his mortgage on his principle private residence at Bachelors Walk, Dublin, the judge said. The insolvency arrangement involves a restructuring of the mortgage to a 10-year term and variable interest rate, with arrears capitalised.
Promontoria had petitioned for Mr Langan’s bankruptcy in 2019, but, in late 2020, he secured a certificate protecting him from legal proceedings by creditors while he applied for a personal insolvency arrangement, said the judge.
In objecting to the application, Promontoria took issue with the solicitor’s debt of €236,800 taking preference over its €4 million.
Mr Justice Sanfey said the solicitor is described as a secured creditor who has a first legal charge over a Wexford rental property. The arrangement provides for this to be placed on the market for €250,000, with the solicitor to be repaid from the net sales proceeds.
Promontoria accepted the solicitor has a first legal charge but claimed it was not registered on time. It claimed it held an equitable charge over the property.
Mr Langan’s debt to the solicitor arose in 2016 when he engaged his services to sue Promontoria and a receiver over the receiver’s appointment over a London property.
In 2019 the High Court ruled in favour of Promontoria and the receiver and granted them judgment of €4.3 million against Mr Langan in their counterclaim.
In approving the arrangement for Mr Langan, Mr Justice Sanfey said his decision was influenced by the “very considerable delay” of Promontoria and its predecessor Ulster Bank in initiating proceedings to establish an alleged equitable mortgage over the Wexford property.
He also considered Promontoria’s “complete failure” to engage with Mr Digney during the period when creditors are required to prove their debt.
The judge said Promontoria had referred to a “litigation pending” or charge over the Wexford folio but gave no further details. Mr Digney asked if Promontoria was claiming security in very specific details, but there does not appear to have been any response to his letter, Mr Justice Sanfey said.
Therefore, Mr Digney was “perfectly entitled” to treat Promontoria’s debt as unsecured in the insolvency arrangement, the judge added.
Mr Justice Sanfey said none of Promontoria’s objections were valid.
