A sheep farmer in the west of Ireland has managed to have his €1m debt halved thanks to a personal insolvency arrangement (PIA).
The farmer owed a number of debts, including a €929,000 debt on his 150ac farm, to so-called vulture fund Promontoria Oyster DAC.
A receiver had been appointed and the farm had been put up for auction, but the sale was stopped and the farmer had the debt negotiated down by Balbriggan-based personal insolvency practitioner (PIP), Gary Digney of PKF-FPM Accountants Ltd.
The personal insolvency plan drafted by Digney managed to reduce the market value of the debt down from €929,000 to €570,000 and the interest rate was reduced to 3%.
A judgement mortgage and circa €160k of unsecured creditors was also written off.
“Most farm cases do not involve a write down, but rather will require time to pay the debt back at a sustainable level. However, as in the case here, a PIA can write the debt down and restructure the farm loan back to a performing basis, over 25 years.
“This allows this farmer the opportunity to repay the restructured debt without the threat of losing the farm, while returning more to creditors than what would be available in a sale,’’ Digney said.
In addition, the family home, where the farmer’s wife and children lived, was saved and mortgage repayment terms were also negotiated.
The farmer is also an ICSA member, and the organisation’s president, Dermot Kelleher, said the debt write down gave hope to any farmers struggling with their finances.
“It is never too late to try to resolve a problem, but it is always better to tackle it sooner rather than later.
“We do not want to see farmland sold against the wishes of the owner, because that only undermines the viability of the farm and the ability to pay back the loan, usually over a longer-time frame,” Kelleher said.
“This settlement has resulted in a complete re-negotiation of the farm loan at a favourable interest rate, to be paid back in manageable instalments over the next 25 years.”