The case was brought by Start Mortgages against a personal insolvency arrangement approved in Trim Circuit Court, which saw a man’s mortgage written down from almost €140,000 to €18,500, The Irish Times reports.

The man would have paid Start Mortgages 60 instalments of €332 per month and been allowed to remain in his home indefinitely.

In return, Start Mortgages would take an 85 per cent ownership stake in the home, which it would not be allowed to sell until the man died.

The test case was struck out after Start raised a technical objection about the fact that, under the Personal Insolvency Act 2012, a debtor cannot appeal in cases where only one creditor votes and votes against an arrangement.

The Insolvency Service of Ireland (ISI) has previously called on the Government to legislate to close the loophole.

Personal insolvency practitioner Tara Cheevers, who devised the arrangement, told The Irish Times that it was “very frustrating that a technicality has knocked over this landmark ruling by the Circuit Court”.

Ms Cheevers added: “Unfortunately, the creditors are just resisting debt for equity. They will just not entertain it. Until we get a High Court deciding on a case, we cannot go anywhere.

“There are loads of cases waiting in the system. If the court had ruled in favour of us, it would have opened the floodgates.”