'Huge' rise in judgements being sought by vulture funds on farm-related debts

But farmers can fight back by going down personal insolvency route, says agri finance specialist

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Margaret Donnelly

Margaret Donnelly

Farmers whose loans are in the hands of so-called vulture funds may be able to save both their family home and farms, through a Personal Insolvency Arrangement, according to a farm finance specialist.

Speaking at an ICMSA seminar on vulture funds last week, Gary Digney, director of PKF-FPM Accountants Ltd, which specialises in personal insolvency cases, outlined how PIAs can work for farmers.

"In many cases, farmers simply want to repay their debts and just need time and an agreement with their lender," he said.

"Over the last number of years, it has proved impossible to reach agreements with banks (often due to not being able to speak to someone with the authority to reach an agreement) and now it is proving even more impossible to deal with investment funds or 'vulture funds'.

"We've seen a huge increase in judgements being sought, receivers being appointed, and bankruptcy proceedings being brought in relation to farms and farm debt.

"All of these strategies invariably seek to take the farm and lands from farmers, and as quickly as possible."

Court protection

However, he said that a PIA comes with the benefit of court protection, and a Personal Insolvency Partner (PIP) can propose an arrangement which capitalises any arrears on debts, extends the term of the loan, reduces the interest rate, and in certain cases reduce the debt.

"This applies for all secured debts and includes farm debts. A PIA can fix a farm loan and move it back to a performing 20- or 30-year loan and allow the farmer repay the debts without the threat of losing their farm."

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He also said that the power of the PIA to keep people in their family homes and farms is tremendous and in certain circumstances the courts can force a PIA arrangement on a fund or bank.

"Since 2015, where a bank or fund rejects the PIA proposal the court can overrule this refusal and force the deal on the bank.

"Given the flexibility of the legislation and coupled with the correct experience and expertise in this area, we believe the current protection offered on the family home against vulture funds can be extended to the family farm."

Key to this, he said, is the farmer engaging specialist advice from an experienced Personal Insolvency Practitioner (PIP), to assess the specific circumstances of the case and bring together a specialist team to utilise the existing legislation to protect the family farm.

Who is eligible for a Personal Insolvency Arrangement?

PIAs provide for the agreed settlement and/or restructuring of debts in the case of people who have secured debts up to a total of €3m, unless all secured creditors consent, (as well as any unsecured debts) and have no prospect of being able to pay off their debts in the next five years.

You can only avail of a PIA once in your lifetime and it's not possible to get a PIA if you are involved in one of the other debt resolution processes introduced by the Act, or in the bankruptcy process, or if you have completed one of these processes within the last five years (three years for a Debt Relief Notice).

At least 75pc of your debt must have been built up at least six months before applying for a PIA.

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