Opinion

Vulture funds need to be totally transparent

I sense that the amount of money owed by Irish farmers to vulture funds has increased dramatically over recent years.

This point became pretty obvious to me as I listened to the presentations given by two experts in the field of insolvency, courtesy of the recent Irish Creamery Milk Suppliers’ Association (ICMSA)-hosted webinar on this crucially important issue.

Of even more significance to me was the scope of the questions and answers (Q&A) session, which followed the presentations. I counted at least 30 questions being answered with the lady chairing the proceedings saying that time did not permit the many questions left unanswered being dealt with directly.

Offloading bad debt

If one takes it as given that the foothold ‘enjoyed’ by vulture funds within the Irish lending market has continued to increase over recent years, then other conclusions can be quickly arrived at.

Chief among these is the assertion that traditional funding providers – the banks included – are more than happy to offload their bad debt at a discounted rate to these other organisations.

It’s almost unheard of for a core Irish bank or building society to put up a ‘For Sale’ sign up at the bottom of a farmer’s lane. But these vulture fund chappies – well they would seem to have no scruples when it comes to sending in the bailiffs.

Advice on resources

A number of take home messages came out of the webinar.

These include the benefits associated with the early appointment of a Personal Insolvency Practitioner (PIP); the need to secure a Protective Certificate from the courts and, thereafter, the absolute necessity of drawing up a Personal Insolvency Arrangement (PIA), which can be adjudicated upon by a judge in open court.

Many of the questions asked at the webinar concerned the possibility of getting a write down on at least some of the debt outstanding.

But no one asked what to me was the glaringly obvious question of the evening: do vulture funds have to declare the level of write down they enjoy when securing loan books from other lenders?

Surely this is the level of write down, relative to the outstanding loan, that should be put on the table when it comes to sorting out a PIA with the original debtor.

Decisions by lenders

Of course, the other issue that kicks into play here relates to the decisions taken by the original lender.

If a bank or building society is happy to sell off a loan at a discounted rate to a vulture fund, surely they should be expected to offer the same terms to the person owing the money, as a matter of course, before moving the loan on.

I would echo fully the views expressed by the two insolvency experts who spoke at the webinar – that farmers will always want to pay their debts. Moreover, a farmer should be given every opportunity to maintain a holding when debt issues arise.