Professional debt still to be tackled, former Mazars head says
Banks have not dealt with investments made by doctors, lawyers and judges before crash
Simon Coyle, former managing partner at Mazars: “You had people with no tradition in investment buying Bulgarian and Spanish properties or shopping centres as parts of syndicates in Germany.”
Irish banks, which have focused in recent years on restructuring troubled mortgages and businesses, have yet to properly tackle unsustainable debt accumulated by professionals before the property crash, according to Simon Coyle, a leading corporate restructuring figure during the crisis.
* Mr Coyle (62) stepped down as joint managing partner at Mazars Ireland in August 2015 and retired as a partner of the practice at the end of August this year after more than 35 years with the firm. Mark Kennedy, who joined the business in 1995 before becoming a partner in 2004, has been managing partner since 2015, having previously shared the role with Mr Coyle.
“Most of the corporate issues have been cleared up but there is still a significant overhang on the personal side,” said Mr Coyle. “There’s a certain element that has been delayed as banks dealt with more time-critical stuff. Anecdotally, it would appear that the professional classes – doctors, lawyers, engineers, judges – are still in play.”
Mr Coyle has been among the most active corporate restructuring practitioners in Ireland following the implosion of the economy in 2008, acting as a receiver on several assets on behalf of Nama and the country’s banks, examiner in high-profile cases such as Elverys Sports and liquidator to firms such as Pierce Construction.
While domestic banks have cut their non-performing loans (NPLs) from an average of 27 per cent of their total loan books in 2013 to 14.2 per cent at the end of last year, they remain well above the 5.4 per cent European Union average. Although much of this is down to mortgages on private homes, NPLs also include other property investment debt.
“The democratisation of wealth in this country, which occurred in a very short space of time [before the crash], caused a significant amount of issues for Irish society,” said Mr Coyle. “You had people with no tradition in investment buying Bulgarian and Spanish properties or shopping centres as parts of syndicates in Germany. A lot of this still has to be dealt with.”
Since stepping down as managing partner of Mazars, Mr Coyle is continuing to work on a number of insolvency cases with Mazars on a consultancy basis and intends to maintain a relationship with “two to four” private clients.
Meanwhile, Mr Coyle, whose work at Mazars has spanned areas from auditing to corporate finance, said that Ireland has much to do to tackle white-collar crime.
“One of the things people have lost sight of is the area of conflicts of interest. It leads to decisions that are compromised in some shape or form,” he said.
“Conflict of interest is at the heart of everything from plain theft to fraud or falsification in a company that’s going insolvent and people associated with it start helping themselves to funds that might otherwise have been directed towards creditors.”
While rates of white-collar crime convictions in Ireland are low, Mr Coyle said that punishment where cases are proven in court needs to be “very, very severe” to provide a deterrent for would-be perpetrators.
White-collar crime “may be very hard to prove but the penalties on conviction need to be so severe that when cases are proven, people have a very big problem,” he said.
* This article was edited on Monday, October 16th