You have got to hand it to Mary Carolan in the Irish Times today who reports on a case at the High Court yesterday where Anglo was pursuing a borrower. The judge, the redoubtable Mr Justice Peter Kelly censured banks in general for their sloppiness in presenting their cases – examples include a €9m claim that had been incorrectly entered as €3m on one application and the €550m loan to one of Liam Carroll’s Zoe companies which came before the courts last January was based on a one page memo. Judge Kelly is not happy at the slipshod manner in which the legal fraternity are dealing with these cases. And although he didn’t regard it as fatal to the case yesterday, he wasn’t happy with the applicant, Anglo, using the word “principle” where it should have been “principal”. The reason you need hand it to Mary is that her piece, with the headline “Anglo recovery case ‘sloppy’” is itself a great example of shoddy presentation, “amount” is spelt a-m-m-o-u-n-t (it might be corrected now but google “ammount” site:irishtimes.com and you’ll see what was originally reported). There is an extraneous “,said” in one sentence in the second paragraph, again might be corrected now. Of course Mary might have been phoning in the story to the news desk but doesn’t the Irish Times use a spell- or grammar-checker? And her reporting is not unique by any means – in recent weeks newspapers themselves have mixed up principle/principal (“when the bond reaches the date of maturity, the issuer repays the principle”), practices/practises (such practises “have no place now”) and don’t even get me started on stationary/stationery (too many examples to list). Of course we know what they mean and in this modern age of txt-ing and instant communication, standards have slipped but shouldn’t professional media organisations strive for something better? The issue of grammar and spelling is one thing – routine errors in reporting and lack of research is another. How many times have you seen reporters say that NAMA is now only taking over loan exposures above €20m? When the reality is that the €20m limit applies to BoI and AIB only, Anglo still has a €5m limit and EBS and INBS never had limits and don’t now.
So rant over (for now). One of the interesting snippets to arise from yesterday’s hearing was the fact that NAMA on 6th July, 2010 wrote to the five NAMA Participating Institutions (PIs – AIB, Anglo, BoI, EBS and INBS) instructing them to obtain prior approval from NAMA before pursuing legal cases against NAMA-bound developers on guarantees of more than €1m. Apparently if action had been initiated prior to that date, no approval was required but that hasn’t stopped the defence arguing in the present case that the action should have been approved by NAMA – Judge Kelly was “not very impressed” with that argument apparently. NAMA give the impression that they are pulling the strings behind several legal cases taken by banks in respect of loans that have not yet transferred – if we believe the reporting, cases will be launched imminently (by banks or NAMA) against 12 developers who owe a total of €300m. Whether that is sabre-rattling by NAMA is debateable. However it does seem a little odd that NAMA would act to prevent an action to pursue a personal guarantee. Although NAMA can see the overall indebtedness of developers to the five PIs, it seems odd that it would prevent any action. Perhaps the MainStream Media might find out from NAMA why it has issued these instructions to the PIs and if indeed NAMA has refused permission to pursue any developers (and if so under what circumstances) – spelling and grammar aside, surely the media is still capable of picking up the phone and asking questions.
The thinking behind NAMA’s action relates to the overall indebtedness of the debtor. Most of it will reside in NAMA. They do not want a bank acting as a “loose cannon” and obtaining judgements and possibly triggering bankruptcy proceedings against a debtor that would affect (that’s with an “a”!) their debtor’s ability to perform under the agreed NAMA Business Plan.
In other words, they don’t want the tail wagging the dog.
Thanks WSTT, that would make some sense. However if a borrower had exposure at one bank only and NAMA prevented any move by the bank against that borrower, that would beg questions. And personal guarantees are likely to be most recoverable at the lower end of the lending spectrum I would have said where a borrower might only have borrowings at one bank. As I say, what you say makes sense but it would be nice if our media might confirm the position with NAMA and possibly find out whether any approvals have been turned down and in what circumstances.
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