The term ‘Vulture Fund’ has certainly been in the news on a regular basis in the last number of years. This is as a result of the sale of bad loans to investment funds by the pillar banks. These loans are being sold at significant discounts by the banks as they are batched into so called bundles.

I get the feeling that sometimes we need a bad guy to point the finger at and that is now the ‘Vulture Fund’ rather than the original bank that provided the loan.

One of the most high-profile loan sales was called Project Eagle. This was a loan sale by NAMA of €1.6 billion of its Northern Ireland debts back in April 2014. As most of these loans were commercial or large property related loans it was big news, but it didn’t have much impact for the person on the street. The game has now changed with the recent sale of smaller personal and home loans which amounts in real terms to hundreds of thousands of borrowers and billions of debt.

These loans can include anything from credit card debts, family home loans, Buy - To - Let loans, smaller commercial or retails loans and residual debt loans. Having hands on experience of negotiating with these investment funds their sole goal is to maximise the return from each loan they have bought. Reviews are done and settlements are achieved on a case by case basis.

These loans are in the main historical debts that are a carry-over from the economic crash which occurred over 10 years ago. In most cases these loans were as unsustainable then as they are now. They could and should have been dealt with back then rather than 10 years later when we would have hoped we would have moved beyond this hangover.

A quick internet search for the term Vulture Fund Sales Ireland brought up the following articles:

Goldman ‘vulture funds’ collect €465m from distressed Irish loans The Irish Times – October 2018

Giant vulture painted outside banking headquarters in Dublin to condemn the sale of vulture funds Dublin Live – March 2019

Vulture funds 'bought tens of thousands of family mortgages' in Ireland at half their value Irish Mirror – April 2019

Vulture funds: Ireland ‘the gift that keeps on giving’? Roscommon People – July 2019

There are hundreds of more articles, but the theme of each article is the same. Bad loans have been sold by the main banks to Vulture Funds and they are in turn going to squeeze all they can out of already distressed borrowers.

The main question should be why the banks that sold these loans did not deal with these borrowers themselves since the economic and property crash. Why did it take over 10 years to get to the point that they are now just selling on these loans? Surely these banks would have been better off engaging with their customers and surely the return they would have garnered would have been better than the discounted price being paid by the Vulture Fund.

Unfortunately, Vulture Funds are here to stay and with further loan sales scheduled for the coming months those in debt will need to engage with these Funds to settle or restructure their debts.

The only way to deal with these Funds is to engage with them to try to resolve these debts. Unfortunately, these Funds are more aggressive than the pillar banks and they have no difficulty with issuing legal proceedings and pursuing borrowers through the courts.

For those in distress the government implemented new legislation in 2012 called the Personal Insolvency legislation. This gives borrowers court protection from their creditors and a path to resolving their debts so they can move on with their lives.

The government also launched a free financial advice scheme called ‘Abhaile’ which allows those in debt get free financial and legal advice to assist them resolve their debts. I am on the panel of advisors for this scheme.

For anyone affected by these loan sales or who is concerned about their debts please contact me

Regards

Mark Ryan