With at least 13 NAMA developers* already declared bankrupt in the UK, it is perhaps a good point to ask if such bankruptcies are undermining NAMA’s work. And last week, the Fianna Fail finance spokesperson Michael McGrath did exactly that when he asked Minister for Finance, Michael Noonan about the matter. The full exchange is here (with emphasis added)
“Deputy Michael McGrath: his views on whether the work of the National Assets Management Agency is being undermined by developers attempting to avail of bankruptcy in the UK; and if he will make a statement on the matter. [31432/12]
Minister for Finance, Michael Noonan: I am advised by NAMA that for a debtor to avail of bankruptcy in any given jurisdiction he/she must first of all establish that jurisdiction as his/her centre of main interest (COMI). The establishment of COMI is a matter for the relevant authorities in the jurisdiction in which bankruptcy is sought. NAMA further advises that in its position as a secured creditor it is generally neutral on the locus of bankruptcy proceedings as long as location does not prejudice the Agency’s potential recoveries from the bankruptee.
I am also advised by NAMA that the comparatively shorter duration of bankruptcy in the UK is not a consideration for NAMA as the bankrupt’s assets remain in the control of the bankruptcy trustee long after the bankrupt may have been discharged from bankruptcy and any failure to make full disclosure may result in the period of bankruptcy being extended, in the case of the UK beyond the initial one year period. NAMA advises that it is currently challenging the release from bankruptcy in Northern Ireland of one debtor, due to non-cooperation with the bankruptcy trustee.
NAMA advises that its position on the locus of bankruptcy proceedings is partially based on positive on-going engagement with several trustees in bankruptcy of NAMA debtors who have been adjudged bankrupt in the UK. The Agency points out that the bankruptcy regime in the UK is well established, sophisticated and that trustees in bankruptcy under the UK system possess extensive powers to compel production of legal and banking information, on a cross-border basis, from the bankrupt. These powers have been used in bankruptcy cases involving NAMA debtors to uncover significant undeclared assets.
The position of unsecured creditors is fundamentally different. Unsecured creditors, whose claims are subordinate to that of secured creditors, may seek to bolster their position by pursuing bankruptcy proceedings against a debtor. It is worth noting that bankruptcy proceedings are rarely brought by secured creditors and usually in cases of non or lack of full disclosure.”
The response above might come as a surprise to some developers actively considering changing their Centre Of Main Interest from the Republic of Ireland to the UK with the intention of ultimately seeking bankruptcy; they now learn that NAMA is “neutral” on the matter as long as it doesn’t prejudice NAMA’s potential recoveries. Now unless the difference between the 12 month bankruptcy period in the UK and the 3-12 years in the Republic of Ireland, “prejudices potential recoveries” then NAMA is seemingly unconcerned. In fact NAMA is apparently satisfied that the expertise of bankruptcy trustees has uncovered previously undeclared assets.
The Northern Ireland developer whose discharge from bankruptcy is being challenged by NAMA, is not identified by Minister Noonan above, but with only six apparent candidates – Alastair Jackson, Fergal McAlinden, Peter McDaid, Mervyn McAlister, Peter Dolan, Sam Thompson – it can’t be that difficult to identify the lucky developer. We know that NAMA is continuing to challenge the discharge from bankruptcy of Cork developer, John Fleming and is seeking an attachment on earnings for two more years, and it is understood there is an issue about John’s pension also, but John’s bankruptcy was in England, so this Northern Ireland challenge relates to a different developer.
*the 13 NAMA developer s already declared bankrupt in the UK – John Fleming, Ray Grehan, Danny Grahan, Tom McFeely, Patrick Fitzpatrick, Bernard Doyle, Paddy Shovlin , Northern Irish developers Alastair Jackson, Fergal McAlinden, Peter McDaid, Mervyn McAlister, Peter Dolan, Sam Thompson