Financial Services

Vulture funds step up enforcement out of spotlight

Cantillon: Summary judgments soar as carrion of Irish boom under growing attack

Summary judgments give a lender the right to chase any or all of a borrower’s assets, whether or not they were pledged as security for the original loan

Tue Apr 25 2017 - 06:00

Last year’s media furore around their activities has quietened down. But it seems the foreign so-called “vulture funds” that bought up swathes of distressed Irish loans are quietly stepping up enforcement against borrowers.

Summary judgment proceedings are a hawkish enforcement tactic that, if successful, give the lender the right to chase any or all of a borrower’s assets, whether or not they were pledged as security for the original loan.

The number and rate of such summary proceedings taken against borrowers in the High Court give perhaps the clearest indication of how aggressively the vultures are pecking.

The data for the first four months of the year suggest the carrion of the Irish boom is under increasing attack.

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CarVal Investors, which bought several portfolios of distressed loans from banks, including PTSB, is the most active of the funds when it comes to chasing Irish borrowers through the courts.

Its various Irish entities, which include Stapleford Property Finance and Launceston, have already filed to close 50 summary applications in 2017 before April is out. That is already nearing CarVal’s total for the whole of 2016.

Hedge fund

Apollo, a US hedge fund that bought a tranche of Irish loans from PTSB, took only seven summary proceedings last year. Already this year, it has filed 10 cases.

Goldman Sachs last year filed about 45 cases via Kenmare Property Finance and Ennis Property Finance. The two entities have already filed 27 in 2017. If they keep up that run rate, Goldman will easily surpass its 2016 total this year.

Cabot, a US entity that bought distressed loans from Ulster Bank, is the only one that has slowed down. Last year, it took 126 borrowers to court in summary cases. So far this year, it has filed 25, a lower run rate.

Overall, so-called vulture funds have filed about 135 summary judgment actions against Irish borrowers. Remember, those are enforcement actions above and beyond the original loan security.

That is 135 potential bankruptcies. And it isn’t even May Day yet.

It seems the vultures’ aggression is inversely proportional to their level of scrutiny in the Irish media.

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