‘The only time it’s too late for help is when the farm has been sold’

Accountant Gary Digney talks about a landmark court verdict that could set a precedent in saving hundreds of farmers from bankruptcy and repossession

The biggest threat to farmers with financial issues is that they are going to the wrong people for advice or looking for that advice too late, according to Gary Digney.

The chartered accountant and personal insolvency practitioner devised a recent landmark Personal Insolvency Arrangement (PIA) for a Roscommon farming couple who owed more than €500,000 to a bank and other creditors. The Circuit Court ruled that the couple, who were represented by Keith Farry BL, could avail of the PIA despite creditor opposition to the arrangement.

The decision is one of a number in the last eight months where both a residence and a family farm have been saved through a PIA. It is the first time such an arrangement has been approved in the face of creditor opposition.

Digney said the decision is significant as it signals a new pathway for heavily indebted farmers to deal with creditors without being forced to sell their land.

In this particular case the farmer owed Danske Bank around €430,000 and had Revenue and other debts of circa €80,000.

“The farmland was worth more than the liabilities, which is often the case with farmers, he and I were able to assess the farm income and could work out that all debts could be paid over a period of 20 years,” he said.

“Even though this payment took the farmer into his mid-80s, it gives him time to repay the debt. Thankfully the courts agreed and this particular farmer has avoided bankruptcy where he would have lost the farm and possibly his family home.”

Digney has an affinity for farming cases as his father runs a dairy and beef farm and his brother is a poultry farmer.

He says a PIA is the ideal and, in many cases, the only solution, for farms with substantial debt.

“The process guarantees engagement with decision makers and the court can overturn unreasonable refusals and approve the proposals.

“Further, the threat of a PIA can often mean the debtor will achieve a more favourable deal, particularly in relation to vulture funds as they simply do not want to be tied into a 20- or 30-year repayment.

“The key to this is the farmer engaging specialist advice from an experienced Personal Insolvency Practitioner (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.

“Farmers tend to go to a family solicitor, accountant, financial advisor or even local auctioneer for advice. But these professionals often tend not to have the expertise or experience to deal with receivers, loan sales, vulture funds and importantly the Personal Insolvency Act which governs options such as PIAs.

“If the advisor cannot avail of the Personal Insolvency Act then all of the available options are not being presented to the client.”

Digney sets out that getting PIP advice doesn’t mean leaving your farm accountant or solicitor but rather, if done correctly, an experienced PIP can work with the existing advisors