Vulture Funds Starting to Make their Mark in Ireland
In yesterday's Sunday Business Post, I read one of the headlines with interest: "Vultures Squeeze Irish Borrowers." The story was about the fact that private equity giant CarVals and financial heavyweights Goldman Sachs have acquired a portfolio of loans from IBRC and now appear to be taking a very firm line with borrowers. Pepper, the Australian loan servicing company, is also involved and their role is to manage the loan portfolio.
In layman's terms, what this means is that if your loan happens to be sold to one of these firms, you now owe them the money as opposed to IBRC. Pepper will be in touch with you shortly and invite you in to make proposals to them on how you are going to pay 100% of the money back. This is where the opportunity sits with borrowers.
We all know that funds are buying these loans at significant discount and the whole exercise is devised around them making a profit. How aggressive Pepper are to the servicing of the facilities and, more importantly, how aggressive their instructions are from their clients, will determine the outcome for the borrower. According to the article in the Business Post yesterday, 25 of these loans have been taken over by receivers already on the instructions of the new loan owners and it's thought that many more receiver appointments are being prepared.
There is a school of thought going around currently that many of these funds will enforce on the loans fairly quickly, appoint receivers, try and sell the assets, and take their money and run from this lovely Island. A sobering enough thought if you happen to owe any of them any money.
Lets see how this one develops...