It has recently been published that Cerberus, the US vulture fund at the centre of a controversy over its Irish dealings, has now closed a deal with AIB for €300 million worth of toxic debt. The term “Vulture Fund” came into the public eye when the Banks started selling their loans to companies like Cerberus, which allowed them to collect the debt in full from the individual.
Unfortunately, this is nothing new as the age of the Vulture Fund industry in Ireland began in 2011, with the sale of €400m of loans by Bank of Scotland.
By 2013, we had seen the emergence of whole loan residential mortgage portfolio trades. Since then massive sales by Nama, IBRC's liquidators and Ulster Bank all added to this trend. To date, Ireland has now witnessed completed portfolio trades of well in excess of €100 Billion.
A borrower with a mainstream bank might be given some credit for being a loyal customer however absolutely no credit is given for such loyalty by a vulture fund. Therein lies the problem. The challenge here is that with the liquidity problem in our market place, it is going to be very difficult for the borrowers to refinance their loans at this time. The result of this will be that many of the assets and businesses within this portfolio will likely have to be sold resulting in many of the borrowers losing what they have been working for and towards for many years.
What should I do?
If you are unfortunate enough to be involved or due to be involved in a loan sale, you need to very quickly get a plan of action together to present to your new creditor.
It is essential that you are fully prepared and have the necessary funding in place to deal with potential enforcement of loans, calls on personal guarantees and asset sales. It is important that you ACT TODAY to deal with this eventuality.
With a Private Equity Company now taking the lead, engagement with borrower will no longer be pedestrian in nature and difficult to make progress with. They will be in contact with you within the first couple of weeks in an effort to determine what your plans may be.
Subsequently, it is very important to take advice in this regard from a regulated team of debt advisors to plan for the future, and the time to act is now.
What we can do to help?
Since 2010, our Loan Sales team, as part of the GDP Partnership family, have had particular expertise in dealing with private equity funds, and we would like the opportunity to share this with you. As a result, our team are more than ready to engage and assist if you have been affected by this.
In the past 12 months, our team has been involved in over £150M of refinancing deals involving private equity companies therefore we are well placed to help you in this regard.
Solutions are available and it can be quite empowering once one works out the different options open to them. Our team have significant experience in this area as we have restructured hundreds of millions of pounds worth of loans in the last seven years. We know what is expected and how to get you to where you want to go. In short, we WANT to hear from you today.