The first person to benefit from a debt settlement under the new personal insolvency regime is reported to have had up to 70% of his debt written off.
The case involved a HSE worker in his 40s from Co Donegal.
This writedown of unsecured debt was a result of a business failure caused by a family member being diagnosed with cancer, according to lobby group New Beginning.
The deal is the first arrangement of its kind under the new Personal Insolvency Act, and was agreed at a statutory meeting with creditors at the office of New Beginning in Dublin yesterday.
New Beginning — a group campaigning for a fair and sustainable solution to Ireland’s over-indebtedness — described the deal as a “watershed”.
The group said they expected the settlement to “pave the way for many more writedowns” in the coming months. Currently, New Beginning has hundreds of similar cases being processed.
Yesterday’s arrangement comes just over a month after the man was granted protection for 70 days from his creditors by the Circuit Court in Monaghan.
The personal insolvency practitioner in the case, Ronan Duffy, of Derry-based McCambridge Duffy, who chaired the creditors’ meeting, described the settlement as very significant.
He said a debtor had made “a full and frank disclosure to address his financial problems under the new system, and his creditors recognised that and voluntarily agreed a large write off of the outstanding debt”.
Mr Duffy said that while the write-off was substantial, it “should be noted that the debtor is paying back what he can afford and this will vary from case to case, depending on income and any assets”.
Ross Maguire, the co-founder of New Beginnings, said that, after more than five years of stagnation, “we finally have a process that’s potentially fast-moving”.
“The insolvency regime only came into operation in September, and already we have reached agreement on the first case,” said Mr Maguire.
“We anticipate that this milestone first settlement will give hope to other debtors.”
Vincent P Martin, the advocacy group’s other founder, said the insolvency regime was “a fair system”, and one that offered “tangible and real hope” for the many thousands of Irish borrowers who had been left behind while businessmen and developers entered and exited the bankruptcy process.
“Now its the turn of ordinary Ireland,” said Mr Martin.
While debtors would be obliged to repay as much as is feasible, the new system had “in-built recognition that saddling people with debts they can never realistically repay is not in anyone’s best interests”, Mr Martin said.
Agreements such as the one reached yesterday, believed to involve a six- figure debt, were an important step in returning individuals to solvency, he said.
It is understood that three out of Ireland’s main banks were among the six creditors involved in the first case.
Not all backed the deal, but a 65% majority is enough under the new legislation for agreement to be reached.
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