The High Court has approved a Personal Insolvency Arrangement (PIA) allowing a former property developer and investor write-off approximately €170m of debt owed to parties including Nama and various financial institutions.
The PIA was made in favour of 55-year-old Barry Harte, from Timoleague, Bandon, Co. Cork, who is to provide a total of €80,000 to his creditors.
He established Harte Holdings approximately 20 years ago which specialised in property investment and development in the hospitality and residential sectors in several jurisdictions, particularly Ireland and London. The business was fuelled by loans from banks and private investors during the Celtic Tiger era.
Following the economic crash in 2008, the group's assets went into negative equity. Keith Farry Bl for Mr Harte's Personal Insolvency Practitioner, John O'Callaghan of KPMG, told the High Court on Monday that following the crash Mr Harte became an effective asset manager for institutions, including Nama, of €650m worth of assets.
Most of the assets have been disposed of.
However, Mr Harte had through personal obligations accrued legacy debts to Nama of €46m, and owed Ulster Bank €23m, Link Finance €4.5m, Pepper Finance €67m, and several individuals, some of whom were owed up to €16m. The total secured and unsecured debt came to over €170.9m, counsel said.
Counsel said that the PIA had been approved by a clear majority of secured and unsecured creditors. Of the unsecured creditors only Ulster Bank had opposed the PIA at the creditors meeting, counsel said.
Counsel said that the unsecured creditors, which accounts for the vast majority of what is owed, will get a return of 0.042% of what they are owed.His secured and preferential creditors, which account for a small proportion of his overall debt, will get a better return, largely thanks to the handing over of assets belonging to Mr Harte.
As part of the PIA, two properties owned by Mr Harte — one in Bundoran in Co. Donegal and another in Co. Tipperary — are to be surrendered to creditors which have charges over those particular assets. Counsel said that overall, Mr Harte's creditors will do marginally better under the PIA, compared to if Mr Harte was to be adjudicated a bankrupt.
Mr Harte will retain assets of just €6,000 which includes a computer and clothing. Counsel said that the funds for the PIA have come from Mr Harte's friends and family. The PIA will last for 12 months following which Mr Harte will return to solvency.
Counsel said that Mr Harte's Co. Cork home does not form part of the arrangement as it belongs to his client's wife Ms Barbara Harte. Counsel said that it was his understanding that the property has been put up for sale and that the Hartes remain in occupation of the property.
Mr Justice Alexander Owens, who noted that under the arrangement the majority of Mr Harte's creditors will get "a tiny return", said he was satisfied to approve Mr Harte's PIA, which also makes provisions for reasonable living expenses of €2,800 per month. Mr Harte's current income is approximately €2,900 per month, the court also noted.