Personal and corporate insolvency EUGENE MCDARBY 05/02/2016 www.uhyinsolvency.ie

Agenda summary Background Case Study Creditor Information Points of Interest New case 2

INFORMAL / FORMAL BANK PROPOSALS Historical Debt Landscape: Creditor Linear approach to debt. “Whoever shouts loudest get paid first” – unsecured creditors Interest only or restructured deals on mortgage Legal route hard to achieve debt write offs with banks preference of banks was to ‘park residual debt’ or judgement mortgage. Core reason for High level of Mortgage arrears. Central bank/ MARP/CCMA The new Personal Insolvency Act now represents an opportunity to enter into informal/formal settlements with lenders on all forms of debt. The psyche is beginning to change-Debt write off now accepted – other jurisdictions The new insolvency structure can act as a baseline for any agreement with the bank. Possible Asset Disposal Strategy-perhaps with DSA/PIA to complete (multiple creditors) or multiple variations of same based on affordability.

Cases Practical approved examples: Michael and Sarah – Dublin – PIA Car Retailer Family home is now a BTL €189,000 unsecured debts – debt with brother!!! Christy – Dublin – DSA Haulage Contractor 4 properties including family home €278,000 unsecured debts

Personal Insolvency Arrangement Secured debts: UB Loan €349k on property valued at €300 RIP €1200 pm agreed at a reduced interest rate of 1.5% Various Unsecured total €189k 6 year dividend agreed at 16.37% ( €640 pm ) VS Bankruptcy at 0% ??? return for unsecured creditors and sale of property

Debt Settlement Arrangement Secured Debts of €1.238 M on 4 properties all sustainable Unsecured debts of €279 k Deal agreed at 18.6% dividend over 5 years ( €980.52) Vs Bankruptcy at 0% ???? for Unsecured

information Typical Information for bank agreement Proposal to include: Current financial position and history of debtor Presentation of options to the debtor including formal insolvency vs Bankruptcy Preparation of the Statement of affairs and estimated Outcome Statement of Various Options Presentation of outline proposal and demonstration how it is better for bank (both financially/non financially) Full traceability of assets (supported by independent valuations)

Points to note Repossession cases: Loan sustainability Land and Conveyance act PIP Fees Debtor change of Circumstance RLE’s – guideline System needs to be less onerous 8

New Case Widowed Lady 67 Family home and rental property on same site in Wicklow: Similar valuations circa €600k each Loan €1.4k million tracker at 2.4% Disabled son living at home Circa 40k unsecured debts Earning circa €3500pm, mainly widows pension. PTSB had issued demand notice and want sale of both properties to clear debts. What options would you negotiate???? 9

Contact details Eugene McDarby Personal Insolvency Practitioner Specialising in personal insolvency and debt issues: Many years experience in providing people in financial difficulties with practical advice Contact Eugene at eugene.mcdarby@uhyinsolvency.ie