Efforts by Danske Bank to proceed with the sale of a 112ac farm in Co Roscommon over a €522,000 debt were halted this week when the Circuit Court instead backed a plan for repayments over 20 years, as the farmer had proposed in a Personal Insolvency Arrangement (PIA).

The farmer sought the court review after the bank rejected his PIA.

PIAs were introduced in 2012 but are only now being used in farm debt cases. They have more commonly been used to protect a family home.

Insolvency practitioner Gary Digney of PKF-FPM Accountants, Balbriggan, who advised the farmer, believes this was the first time a PIA was imposed by the court despite creditor opposition.

A small number of PIAs were previously approved by courts where a farmer and his creditor had agreed repayment terms.

“Farmers tend to bury their heads in the sand until the last minute or try achieve a settlement informally with a bank or vulture fund,” he told the Irish Farmers Journal.

“But a PIA is the only mechanism to force a deal on a creditor. A large percentage of farmers with debt problems would meet the criteria.”

Vulture funds could be more willing to settle rather than face a court-enforced arrangement involving repayment over many years, he said.

Short-term approach

“They have a short-term approach – they don’t want to be banks.”

Danske Bank told the court the farmer had defaulted nine years ago on loans of €434,000 and since then made just one repayment.

It said the land could be sold to clear the debts while leaving the farmer in the family home.

IFA UIster-North Leinster chair Nigel Renaghan has dealt with a number of indebted farmers.

“Farmers should be proactive and seek professional advice including advice on getting a PIA,” he said.