Companies owned by investment fund Cerberus collected more than €113 million last year on boom-era loans bought from Irish banks and the State following the financial crash.
New York-based Cerberus was one of the biggest buyers of Irish property debts as the Republic and its banks grappled with the long-term consequences of a 2008 crash that left the State in need of a bailout.
Figures recently filed with the companies’ office show that three of the entities that Cerberus established here to buy loans collected €113.6 million in total from debtors in 2021.
Buying the debt entitled the fund to collect any repayments due, or take control of the properties and other assets used to secure the loans. In most cases it bought the liabilities for fractions of the totals actually due.
Promontoria Finn, which in 2015 paid Ulster Bank €305 million for hundreds of loans secured against homes and businesses, collected €25.8 million from debtors last year, its accounts show.
The company repaid €21.9 million of a loan split 75/25 between JP Morgan Stanley and Austrian lender Bawag. On December 31st, those banks were due €34.8 million.
In July 2017, they gave Promontoria Finn a €197 million senior secured loan, which means it is secured against company assets and is repayable ahead of any other debts should the business be wound up. The company itself lost €690,000 last year.
Promontoria Aran collected €62.8 million in 2021, the figures show. In 2015 the company paid Ulster Bank €1.35 billion for loans against secured properties in the Republic, Northern Ireland and Britain. The debtors owed the bank a total of £4.8 billion (€5.7 billion).
The company repaid €51.5 million of a senior loan to Deutsche Bank, from which it borrowed €900 million to buy the loans. Promontoria Aran subsequently refinanced this debt with the same lender. The company recorded a €3.8 million profit last year.
It also repaid €1 million against a €300 million loan due to its shareholder, a Netherlands-based Cerberus subsidiary, Promontoria Holding 128 BV.
Promontoria Aran's debtors included developer Mick Wallace, now a member of the European Parliament, who owed Ulster Bank €2 million. During his time as an independent TD, Mr Wallace was a trenchant critic of so-called vulture funds.
He highlighted the Project Eagle controversy in which Cerberus found itself embroiled after paying the National Asset Management Agency (Nama) €1.6 billion for debts owed by borrowers in Northern Ireland.
Questions about the deal prompted parliamentary investigations on both sides of the border and a criminal inquiry in the North. It emerged that £7 million had been transferred from Belfast law firm Tughan's, which worked on the deal, to the Isle of Man, and then returned to the firm, which had no knowledge of the transaction.
Belfast businessman Frank Cushnahan faces trial for fraud, while solicitor and former Tughan's managing partner Ian Coulter will be tried for false representation, as a result of the criminal investigation. Both plead not guilty. Cerberus and Nama deny any wrongdoing.
Promontoria Arrow collected €25 million from debtors last year, the figures show. In 2015, the company paid Nama €739.2 million for property loans mainly in Ireland and Britain. The total due on the loans was €6.25 billion.
During the year Promontoria Arrow repaid €16.6 million against a senior secured loan from Deutsche Bank totalling €55.9 million. The company made a profit of €77,830 last year.
Cerberus gave all companies used to buy Irish debts the “Promontoria” tag. The US fund owns all of them through Netherlands-registered subsidiaries. The Dutch companies and several banks loaned them cash to buy the loans.
Initially, this allowed the Irish-based Cerberus companies to take advantage of a tax break meant to lure global property investors here.
This allowed these businesses to write off the cost of borrowing to pay for the loans against their tax liablities, reducing them to neglible amounts.
However, the Oireachtas subsequently amended this provision, Section 110 of the Taxes Consolidation Act, closing the loophole for Cerberus and other funds.