Court prohibits a bankrupt’s ability to contest a previously admitted debt

A recent Court of Appeal decision clarifies that a Bankrupt is not entitled to challenge a debt when he had acknowledged that same debt in an application for a Protective Certificate as part of the Personal Insolvency Process.

In Pepper Finance Corporation (Ireland) DAC v McLaughlin (A Bankrupt)1 the Court of Appeal dismissed the Bankrupt, Mr McLaughlin’s Motion to Dismiss his Bankruptcy Summons and an Order of the High Court adjudicating him a bankrupt on 11 February 2021 on the following grounds:-

1. the trial judge was entitled to have regard to a Protective Certificate issued by the Circuit Court under the Personal Insolvency Act, 2012 (as amended) as an acknowledgement of debt by Mr McLaughlin for the purposes of the bankruptcy proceedings.
2. Mr McLaughlin cannot derail the bankruptcy process by invoking the personal insolvency process in which he admits the debt, but rely on the motion in the bankruptcy to argue that the debt does not exist.
3. even if the High Court was wrong about the ability to rely on the Protective Certificate, there was ample evidence before the trial judge from which he could conclude that the Bankruptcy Summons was valid and effective to adjudicate Mr McLaughlin bankrupt.
4. the trial judge correctly concluded that the motion to dismiss the Bankruptcy Summons issued by Mr McLaughlin did not disclose any issue in respect of the debt particularised in the Bankruptcy Summons that arises for trial.


In April 2008, credit facilities totalling €3,204,011.65 were advanced to Mr McLaughlin and his wife by Bank of Scotland Ireland Limited. Mr and Mrs McLaughlin defaulted on the loan agreements and on 30 September 2013 the High Court granted judgment against them in the amount of €4,022,734.92. This decision was appealed to the Supreme Court but said appeal was dismissed.

On 20 April 2015, the loan agreements pertaining to the credit facilities were transferred to Ennis Property Finance DAC (Ennis) and on 7 August 2018, Ennis made statutory bankruptcy demands for the then outstanding sum of €2,006,898.01. When those demands were not met, Ennis applied for Bankruptcy Summonses. On foot of that application, the High Court issued two Bankruptcy Summonses dated 19 November 2018 one of which was addressed to Mr McLaughlin. In response to the Bankruptcy Summons, Mr McLaughlin issued a Notice of Motion to Dismiss the Bankruptcy Summons. Ennis followed the process and then issued a Petition on 18 February 2019.

The Bankruptcy Proceedings

A first hearing date for the Petition was fixed on 18 November 2019 but was adjourned at the request of the McLaughlins. A second hearing date was fixed on 29 November 2019 but was adjourned again because both Mr and Mrs McLaughlin had engaged a Personal Insolvency Representative (PIP).

The McLaughlins then subsequently applied for a Protective Certificate which allowed them an initial period of 70 days in which to explore the possibility of entering into a Personal Insolvency Arrangement with their creditors, including secured creditors. As part of this process the McLaughlins were required to complete a Prescribed Financial Statement (PFS), and to make a statutory declaration confirming that the statement is a complete and accurate statement of their assets, liabilities, income and expenditure. Crucially Mr and Mrs McLaughlin in the PFS acknowledged money due and owing to Ennis however, the Protective Certificate lapsed when the proposal did not get the requisite creditor support at the meeting of creditors.

In the meantime, during 2020, the loan agreements transferred from Ennis to Pepper Finance Corporation (Ireland) DAC (Pepper). On 5 December 2020 the Bankruptcy proceedings were re-entered along with the motion to dismiss the Bankruptcy Summons and a hearing date of 11 February 2021 was allocated to the proceedings.

At the hearing, the trial Judge noted the admission by the McLaughlins in the Protective Certificate of the debt due and owing to Ennis (now Pepper) and stated that it was not now open to them to deny that liability here and the motion to dismiss the Bankruptcy Summons was dismissed. The trial Judge then considered the Petitions before him and made an Order adjudicating Mr and Mrs McLaughlin bankrupts.

Notice of Appeal   
As mentioned above, the Order of the High Court dated 11 February 2021 was appealed by Mr McLaughlin to the Court of Appeal where the appeal was dismissed on the grounds outlined above.


This Court of Appeal decision is sure to be welcomed by financial institutions in that it provides clarity and certainty around the admissibility of the contents of a PFS in Court proceedings. It is now clear that it is not open for a debtor to make an admission during one statutory process and to attempt to resile from that admission in a separate bankruptcy process. It will also be interesting to see if in the future, acknowledgment by a debtor of money due and owing to a lender in a financial statement will be sufficient to prevent the debtor later challenging the debt during Court proceedings or prevent them from pleading that a claim is out of time or statute barred.

For further information or practical advice on the impact of this judgment or any aspect of personal insolvency, bankruptcy or corporate insolvency law please contact Deirdre Murphy or Andrew Croughan of our Insolvency team.
1 In the matter for a Petition for Adjudication of Bankruptcy of Patrick McLaughlin – Between Ennis Property Finance DAC/Pepper Finance Corporation (Ireland0 DAC and Patrick McLaughlin [2021] IECA 292.