What to do if you fear your farm is going to be repossessed
Personal insolvency practitioner Gary Digney, who recently won a High Court battle to keep a Wexford farmer on his land despite debts of €3.2m, tells Margaret Donnelly what steps farmers can take to keep creditors at bay
An approval by the High Court last week means that vulture funds will be required to accept a plan put forward by indebted farmers.
A Wexford farmer had his sizeable bank debts restructured and written down after the High Court approved his Personal Insolvency Arrangement (PIA).
The farmer retains his entire 180-acre farm but must sell off some investment properties and use the proceeds to repay the reduced debts, by deadlines agreed in his arrangement.
This was the first such PIA involving a farmer to be passed in the High Court.
The farmer has total debts of €3.2m, which include €284,859 originally borrowed from Ulster Bank and secured on the farm. This debt was sold by Ulster Bank to vulture fund Promontoria Oyster DAC, part of a package of so-called ‘underperforming loans’.
Under the PIA this debt remains in place and the farmer must pay it back in full to Promontoria by an agreed date. The farmer has 36 months to complete some partially built investment properties, the proceeds from which will be used to repay his debts.
The farmer will also submit part of his pension to repay his debts.
In addition, the farmer owed some €1.2m on a mortgage he had taken out to make off-farm investments. This debt was acquired by vulture fund Start Mortgages DAC. It is now written down to €400,000, with an extension of the term to repay, with a further €400k of other debts written off.
The farmer had attempted to negotiate himself but was unsuccessful. A Fixed Charge Receiver was appointed over the
Protecting the family farm:
lands by Promontoria and the land was put on the market for sale. The farmer then sought advice from Gary Digney, a chartered accountant and personal insolvency practitioner, of PKF-FPM Accountants, Balbriggan. Digney, who is from a farming family himself, is an expert in farming PIAs and debt resolutions. “The first and key step was to apply to court for an emergency Protective Certificate,” he said. “This will give the debtor protection from anyone trying to seize assets or sell land, in effect the debt is frozen.
“The Court will usually grant the debtor a 70-day protection moratorium from creditors in order to give some breathing space to prepare a
PIA proposal and put forward to creditors. Only a personal insolvency practitioner can apply to court for a Protective Certificate. “I then entered into negotiations with the various creditors on the farmer’s behalf. Some creditors rejected the proposed PIA; however the case was passed High Court.”
Digney said the plan put forward and the negotiations that took place were very complex and were similar to examinership process that some commercial companies undergo when in financial difficulties.
‘’Farms are indeed a business and the proposals are often complex. However, having experience of farming personally and having acted for hundreds of farmers in our accountancy practice, this experience I find is off significant importance with developing farming proposals.
“I was delighted with the outcome of the High Court case, which allows the farmer and his family to retain the lands and move on with their lives without the threat of a sale.
“I would encourage any farmer or indeed anyone in debt to contact a PIP and get your options accessed.
“Farming is the bedrock of the economy and it is vital, especially given the Covid-19 crisis and the impending Brexit situation, that farms are not repossessed. If debts can be restructured and repaid then this is what should happen.”
According to Digney, farming bodies and advisors have been trying unsuccessfully to find a solution for farmers in debt, mainly due to being unable to reach a decision maker and unreasonable refusal of all proposals.
“A PIA is a fantastic solution and in many cases the only solution to save farms and restructure debts to a sustainable level,” he said. “The process guarantees engagement with decision makers and the court can overturn unreasonable refusals and approve the proposals.
“The key to this is the farmer engaging specialist advice from an experienced PIP, to assess the specific circumstances of the case and bring together a specialist team to utilise the existing legislation to protect the family farm.”
‘A Personal Insolvency Arrangement is a fantastic solution and in many cases the only solution to save farms and restructure debts to a sustainable level’