Company negotiating with vulture fund told offer under discussion would not be made before an Oireachtas Committee
A company negotiating with a vulture fund was told the offer under discussion would not be made if the company appeared before an Oireachtas Committee, according to the head of the Irish Small and Medium Enterprises Association (ISME).
Neil McDonnell told the Oireachtas Finance Committee that the message was conveyed by a receiver acting on behalf of a vulture fund he did not name.
“I was to have been accompanied here by a member company which is going through a debt restructure, but it was made very clear to them that the offer being negotiated currently would not be offered if the company appeared before you,” Mr McDonnell claimed.
The committee was meeting with representatives from the farming and small business communities to discuss the issue of loans being purchased from banks by vulture funds.
Joe Healy, president of the Irish Farmers Association (IFA), said farmers had lost trust in the banks because of loan sales.
“Farmers view banks who sell their loan books as abdicating their responsibility to see through their dealings with their customers,” he said.
“There is a loss of confidence in the banks, among the farming community, and it is now necessary for the banks to recognise this and to provide all possible solutions to a borrower before the sale of loans.”
He said the IFA was dealing with 150 cases of farmers who had loans sold to vulture funds.
“These vulture funds take a short-term debt recovery approach to the loans acquired. They are not interested in working out a long-term debt resolution with the customer,” Mr Healy claimed.
“This short-term debt recovery approach through the sale of assets, damages the underlying viability of family farms, as the repayment capacity of the business is not considered. As the ratio of the security value to debt level tends to be significantly higher, this issue is a particular problem for the farming sector.”