Judge Reduces Irish Farmer’s €1.5M Debt to €20,000 in Court Ruling

A High Court ruling has significantly reduced the unsecured debt of a farmer in Co Westmeath from €1.5 million to just under €20,000. This decision was made by Ms Justice Nessa Cahill on March 25, 2025, during the approval of a personal insolvency arrangement (PIA) for James McDonnell, a 52-year-old father of four.

Mr. McDonnell’s financial troubles stemmed from investments in buy-to-let properties that ultimately did not yield the expected returns. His application for the PIA was presented by his Personal Insolvency Practitioner, Gary Digney, and moved forward by barrister Keith Farry, under the instruction of solicitor Nicola Nevin.

The farmer operates a family farm and also works as a grounds maintenance contractor. His total debt, which includes an outstanding mortgage of €209,393 on his family home, exceeds €1.7 million. Mr. McDonnell, along with his father, initially entered the buy-to-let market believing it to be a sound investment strategy. However, the economic downturn led to difficulties with tenants and prolonged vacancies, resulting in substantial financial losses.

During the court proceedings, it was revealed that the family home, co-owned with Mr. McDonnell’s wife, has a current market value of approximately €460,000. The secured mortgage owed to Bank of Ireland Mortgage Bank stands at €209,393. Other assets include €5,000 worth of livestock and essential machinery for farming, alongside a pension fund valued at about €8,500.

As part of the PIA, the mortgage term will be restructured to 18 years, maintaining an interest rate tied to the European Central Bank’s variable rate, plus a 1.05 percent margin. Monthly repayments are estimated to be €1,276. The arrangement allows Mr. McDonnell to pay off €1.5 million in unsecured debt, leaving a total of €19,791 available for unsecured creditors. Approximately €1 million of this debt is owed to the financial fund Promontoria Aran, while the remainder is primarily owed to Mars Capital Finance DAC due to shortfalls from property sales.

Mr. McDonnell’s household income is around €3,773 per month, with fixed costs of nearly €2,190, plus additional healthcare and insurance expenses of €275. This results in a monthly contribution of approximately €455 towards the PIA. Additionally, a lump sum of €30,000—sourced from personal savings and a loan from his mother—will support this payment plan over the next year.

Despite opposition from a majority of unsecured creditors during initial meetings, the court found that the proposed PIA served the best interests of Mr. McDonnell’s dependent children and the family’s joint ownership of their home. Mr. Farry noted that bankruptcy would yield a higher return for unsecured creditors, at about 5 percent compared to 1.5 percent under the PIA. Nonetheless, after reviewing the situation, Ms Justice Cahill concluded that the arrangement was in line with public policy regarding insolvency.

In her ruling, Justice Cahill emphasized the importance of considering the welfare of Mr. McDonnell’s family and the absence of significant alternative assets. With no objections raised after the application was served, the court approved the PIA, marking a significant turning point in Mr. McDonnell’s financial recovery.