Farm Ireland

Tuesday 22 January 2019

Vulture funds demand full repayment on farmers' loans due to land value

Shane O'Loughlin of the ICMSA
Shane O'Loughlin of the ICMSA
Claire Fox

Claire Fox

Farmers whose loans have been taken over by vulture funds are finding it extremely difficult to secure deals on their debts due to the level of security the funds hold.

Debt resolution consultant, Matt Carey, said vulture funds were invariably looking for full repayment of farmers' loans and were unwilling to consider either refinancing or restructuring of the borrowings.

Mr Carey pointed out that farmers and land owners differed from most other borrowers in that the level of security available, usually deeds to land, generally exceeded the value of their loans.

"Because the security held is usually far greater than the loan amount, the vulture funds are looking for full repayment and are unwilling to consider other options," Mr Carey said.

The issue was coming to a head because the €2.3bn of non-performing loans sold by Ulster Bank in October 2016 were now at either final negotiation stage or heading to court.

"You have to go through a process which usually involves around six stages of communication. That is now either coming to a successful end or the Vulture Funds are taking the legal route," Mr Carey said.

Mr Carey described the inflexible attitude of vulture funds as "outrageous" and that the actual consequences of the loan sell-off policy by the banks would become apparent as the year progressed.

Shane O'Loughlin of the ICMSA business committee said the association had warned of the problems of selling impaired loans to vulture funds.

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"In many cases and given any kind of fair opportunity, very often farmers can and will work through their loans repayments with the appropriate restructuring. But the reality for many of the farmers dealing with vulture funds is that they are hitting a brick wall," Mr O'Loughlin said.

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