Section 102(6) of the Personal Insolvency Act 2012 contains a non-exhaustive list of secured debt treatment that may be included in the terms of a personal insolvency arrangement. This list includes interest only payments for the term of the arrangement, part interest and part capital payments, interest rate reductions, principal reductions and creditor agreement to a reduction in the principal sum in return for a share in the equity of the debtor’s property, also known as, debt for equity.
A number of personal insolvency arrangement scenarios are included on the website of the Insolvency Service of Ireland (ISI) which include examples of both secured and unsecured debt write-downs. These scenarios reflect the range of standard offerings that creditors have agreed with personal insolvency practitioners in successfully concluded arrangements approved by the courts.
The ISI monitors the outcomes of personal insolvency arrangements, in particular they monitor the commercial terms of successful arrangements. Where a new trend emerges, the ISI will add to the scenarios on its website.
I am advised that the ISI is not aware of any creditor whose credit guidelines provide debt for equity as a standard offering to personal insolvency practitioners. However, the ISI is aware of a number of debt for equity solutions that have been proposed by personal insolvency practitioners to cater for the exceptional circumstances of individual debtors. These proposals are currently subject to the section 115A court review process. I understand that the ISI will continue to monitor the progress of these cases and will publish such a scenario on its website if cases are successful.