Archive for April, 2013


News this evening from Connecticut that the bankruptcy trustee managing Sean Dunne’s bankruptcy has sought two new subpoenas compelling a US bank and a surveyor to submit to questioning in relation to Sean’s affairs.

The bankruptcy trustee, Richard Coan and his law firm, Coan, Lewendon, Gulliver and Miltenberger have asked the court to grant them a so-called Rule 2004 Examination which, if granted, will allow them to question two parties, who they claim, have information relevant to the assets of Sean and/or transfers and/or other information.


The two separate parties are Andy Smyth – pictured above – a surveyor with the New York firm, Bruce Shaw and secondly, a bank, People’s United Bank in Connecticut. The subpoena applications are here and here. The judge has not yet approved them but he did approve a subpoena application which compels companies in the Credit Suisse group to submit to questioning.

Neither People’s United Bank nor Andy Smyth are shown as creditors on Sean’s filings.

UPDATE: 1st May, 2013. Bruce Shaw, the Irish headquartered quantity surveying and property services firm is on Sean’s creditors list. Sean who is himself a quantity surveyor, has a long history with Bruce Shaw. It is understood he went to college with Michael Scollard and Derry Scully who worked at Bruce Shaw. In fact Michael Scollard left Bruce Shaw to work as project manager on Sean’s ultimately-disastrous Ballsbridge development – “Knightsbridge in D2”.  Bruce Shaw was very active in the boom, being Ireland’s largest quantity surveying firm and was particularly active in the development of Dublin’s docklands.


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Well, the surprise is, it took them so long!

This evening, communication has been received from Hayes Solicitors, acting on behalf of NAMA, threatening that unless a commitment is given not to publish the table referred to in this blogpost, then NAMA will seek “injunctive relief” to prevent such publication. The table referred to in the blogpost on John Fraher’s affidavit purports to show 103 loans with the name of the borrower which in some cases is an individual or group of individuals and in others is a company or business. Each of 103 loans shows “Full due diligence nominal value local currency” and “final acquisition value, euro” or in layman’s terms what appears to be the par value of the loan and the NAMA valuation. Remember NAMA has acquired €74bn of loans at par value and paid 43c in the euro on average, or €32bn in total.

The reason the table is troublesome is that, according to John Fraher, it shows co-borrowers of his, but also loans unconnected at all with John Fraher. NAMA has also said that it does not disclose the acquisition value of loans, disclosure of which might give a potential buyer an advantage because it would give them an indication of what NAMA might expect to achieve if it sold the loans.

In his affidavit John Fraher claims that this loan information was provided to John’s financial advisers by a NAMA employee named Padraig Reidy. NAMA was asked for comment on the affidavit and the tables more than two hours before publication of the blogpost, which withheld publishing the table pending consideration on here of privacy issues. NAMA’s solicitors this evening “request the immediate provision of an undertaking to desist (sic) from publishing such data to be confirmed to us by no later than 9.30am” tomorrow.

NAMA’s solicitors also claim this evening that the statement in the blogpost

NAMA “has provided reams of confidential information to third parties” according to an affidavit of John Fraher’(sic)”

is not correct

“for the record”.

Well, let’s see about that. John Fraher states the following in his affidavit

Paragraph 8 “I beg to refer to a listing of the members of Connection 872 together with the nominal value of Connection 872’s facilities and the acquisition price paid by NAMA/the Plaintiff to the Participating Institution, which was given to my financial advisers by Mr Reidy which is at Tab 2 of the Booklet. Since the proceedings herein were instituted, Mr Reidy has contacted my financial advisers asking that they destroy the document”

Mr Reidy is referred to in an email from John Fraher in the same file as the troublesome data as NAMA Portfolio Manager Mr Padraig Reidy.

Paragraph 9 “As is apparent from the listing, Connection 872 includes individuals and entities with which I have no connection whatsoever and with whom I have no joint or several liability to NAMA”

This is where the “third parties” arises. John Fraher is a third party to some of the borrowers, and so are John Fraher’s financial advisers.

The attached table purports to show borrowers, par values of loans and NAMA acquisition values of loans. Hands up anyone who thinks this is “confidential”? And if it’s not “confidential”, then what would NAMA’s grounds be for seeking an injunction.

“Ream” is defined as “a very large amount” and seems apt for 103 loans with names of borrowers and apparent par and NAMA acquisition value

So, taken together, it seems that “the record” shows John Fraher’s affidavit does justify the blogpost title

“NAMA provided reams of confidential financial information to third parties – affidavit”

For the record.

As for the attached tables of borrowers, par values of loans and NAMA value of loans which John Fraher claims were provided to his financial advisers by a NAMA employee, NAMA hasn’t denied the accuracy of the information nor has it denied the information was provided to John Fraher in the manner claimed. And in preparation of the blogpost yesterday, comment was sought in the usual way beforehand, and with more than three years of experience of NAMA’s PR company, communication, even if at 7.30pm on a Monday evening, is responded to promptly if there is comment. NAMA hadn’t commented two hours later, and in fact, NAMA has still not commented on the affidavit.

As for the content of the tables, the opinion on here is they do contain confidential information that should not have been disclosed by NAMA and which the borrowers would expect to be kept confidential Accordingly, this blog is happy to give to NAMA an “unequivocal undertaking to desist (sic) from publishing such data”

In fact, the NAMAwinelake blog will go further and hereby gives an unequivocal undertaking that it will not disseminate the data in any way whatsoever.

With one single exception.

The affidavit and tables will be provided to Mr Billy Hawkes, the Data Protection Commissioner together with a complaint that NAMA has, not for the first time, apparently failed in its duty to protect the privacy and confidentiality of data – namely details of borrowers and loans – and in so doing is in breach of the Data Protection Act 1988 (as amended).

Some nights, you’d wish the wine lake wasn’t just a concept!

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The recent PBN Property Limited report and accounts revealed that one of the founders, Neil Adair had resigned in March 2013. PBN Property is a Northern Ireland property company but it may be known to you on this side of the Border for two reasons – one of its founders, Neil Adair is the former boss of Anglo in Northern Ireland and secondly, [CORRECTION] one of Neil’s co-founders at PBN, Patrick Kearney was one of the Maple 10 or Anglo Golden Circle who clubbed together to buy Sean Quinn’s stake in Anglo using loans advanced by Anglo. “PBN” is derived from the initials of the first names of the founders, Neil, Patrick and the third founder Brian McConville. It was founded in 2005 and is now a NAMAed company.

We see that 51-year old Neil – pictured here – is getting more involved with a Northern Irish firm of insolvency practitioners called “PJG Recovery”. His biography on the firm’s website says Neil “has substantial experience of working with financially stressed companies in Northern Ireland and the Republic of Ireland and is an expert in business turnaround and reconstruction involving both formal and informal insolvency and recovery procedures” [ENDS]

Neil has been working with PJG on a part time basis for two years, but it seems his activities at the company are being ramped up.The recently-published report and accounts for PBN for year ended June 2012, show the company is balance sheet insolvent to the tune of GBP 4m, and there are question marks over the GBP 162m valuation of its property holdings with the auditors giving a qualified opinion on the accounts because of this. An ideal candidate for “business turnaround and reconstruction” perhaps?!

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The Taggart brothers, Michael and John are borrowers in NAMA and indeed earlier this year, one of their companies sued NAMA in Dublin’s High Court. But the Taggarts from (London)Derry also had substantial borrowings at Ulster Bank and since 2008, Ulster Bank has been pursuing the brothers for hundreds of millions. The Taggarts hit back accusing Ulster Bank of misrepresentation, material non-disclosure and breach of contract. Last week in Belfast, in the face of what the Judge called “trenchant opposition by the bank”, the Judge ordered that three actions be combined together for a forthcoming hearing. Ulster Bank is pursuing two personal guarantees of GBP 9.3m (€11m) and the Taggarts are claiming that Ulster Bank’s behavior destroyed their business.

The Taggarts developed property in Northern Ireland, Britain, Luxembourg and also in the Republic. It is a €21m development site in Kinsealy, north Dublin, in relation to which Ulster Bank is pursuing the guarantees. The Taggarts are claiming the bank destroyed their business and about 500 jobs without proper cause. It is a bad-tempered fight and the Judge in Belfast’s High Court last week, Mr Justice Bernard McCloskey, referred to the frequent “skirmishes” in his court as the three matters at issue have progressed. There appears to have been issues with the banks disclosing documents to the Taggarts.

We are set to have a full hearing in May or June 2013 where the issues will be aired. Other bank borrowers, not just those with Ulster Bank, will closely follow the case to see if parallels can be successfully drawn with their own circumstances.

The judgment last week which ordered the three matters to be heard together is here.

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Yesterday, one of the three main ratings agencies, Standard and Poor’s reiterated its forecast from January 2013 that Irish residential property prices will stabilize in 2013. In January 2013, S&P was predicting an almost-irrelevant 1% decline in 2013 and that we were practically at the bottom. In a note yesterday, S&P reiterated this theme. The report is here but is only available to subscribers but S&P is reported to have said

“The heavy slump in the Irish housing market appears to have bottomed out. House prices posted their first quarter-on-quarter increase in 22 quarters in Dec 2012 and we forecast that prices will stabilise this year and next, after falling 6.1% in 2012… The Irish property market will likely continue to stabilise for the next two years, in our view…Price-to-income and price-to-rent ratios have returned to their long-term average, indicating that prices have reached an equilibrium. Economic recovery in 2013 and 2014 should also support demand for housing…Still, while momentum appears to be building in the housing market, the rate of increase in transactions and house lending this year may not exceed 2012, as mortgage interest relief has ended…What’s more, a new local property tax coming into force later this year may also drag on the price upturn”

House price predictions in Ireland can be provocative particularly after the collapse which means prices today are around 50% down from peak in 2007. The two other ratings agencies, Moody’s and Fitch are both predicting 20% additional declines, in Moody’s case the prediction is from summer 2012 and in Fitch’s the prediction is from January 2013.

Now, the ratings agencies didn’t cover themselves in glory before the US and European financial crises from 2007 onwards, so you should probably take  their predictions with a healthy dose of caution. Mind you, unlike predictions from many other sources, the ratings agencies don’t really have any skin in the game, so you might say their predictions are more independent.

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For those of you twiddling your thumbs awaiting Sean Dunne’s statement of financial affairs, you won’t have much longer to wait. Sean has sought, and has been granted, a second extension to the deadline to file his financial statements, and the revised deadline is this coming Thursday, 2nd May 2013.

In the application for the second extension – the first extension expired last Saturday 27th April, 2013 – Sean’s award-winning lawyer repeats the grounds cited for the first extension and seeks the extension “due to the extent and complexity of Mr. Dunne’s historical financial affairs and the necessity to review and translate the information already assembled intothe form required by the Schedules”

The documents that Sean should now file later this week are “Chapter 7 Means Test, Schedules of Assets and Liabilities, Attorney Disclosure Statement, Statement of Financial Affairs, Debtors Declaration Page, Statistical Summary of Schedules, Summary of Schedules, and Statement of Intent”

The Bankruptcy court has today agreed the new extension.  The application and order are available here, and an extract is shown above.

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This doesn’t look good for NAMA, at all, and particularly just a few days after businessman and developer Paddy McKillen launched a High Court action against NAMA alleging breach of privacy and confidentiality.

In a separate case entirely, NAMA is suing Tipperary businessman John Fraher. Today in the High Court, the redoubtable Judge Peter Kelly entered judgment against John for €5,508,983.  Sadly for John, there’s nothing exceptional about it, he owes the money and hasn’t paid it, and he has now filed for bankruptcy in the UK with a hearing scheduled for 17th May 2013.

What is exceptional is that John’s affidavit reveals evidence that NAMA is sharing, or at least shared in John’s case, details of loans owing by people connected to John, but also people unconnected to John directly but merely connected to borrowers who are in turn connected to John. Not just that, but NAMA seemingly disclosed not just the par value or nominal value of the loans but the value at which the loans were acquired by the Agency.

John claims the details were given by an employee of NAMA, Padraig Reidy, to John’s financial advisers. In his affidavit, John claims that since these proceedings have started (in January 2013) NAMA has been in touch with John’s financial advisers “asking that they destroy” the loans listing. John appears surprised that he was given a listing of loans which includes “individuals and entities with which [he has] no connection whatsoever and with whom [he has] no joint or several liability to NAMA”.

The co-borrowers include Jack Ronan, the pantomime villain in the Vita Cortex production which saw 50 staff stage sit-ins at the Cork Vita Cortex factory for nearly six months when there was an apparent reneging on a redundancy deal. According to John’s affidavit, John says he believes the loans to a company called “Vita Five” relate to the Vita Cortex business. John is unhappy because the Vita Cortex workers picketed the Poppyfield Retail Park in Clonmel in an apparent attempt to put pressure on Jack Ronan to stump up the reneged-on redundancy payments. John apparently co-owns the Poppyfield property with Jack and says that the picket affected business there, which was no fault of his. John is also unhappy with what he claims was NAMA’s focus on other borrowers in his connection to his sidelining and exclusion.

John claims he offered to settle his own loans to NAMA in July 2012 and claims the offer would have produced a surplus for NAMA – presumably by reference to NAMA’s acquisition values which it bizarrely revealed to John – but says John, “said offer was refused out of hand and without any negotiation as it did not deal with his” co-borrowings.

John complains that at NAMA’s behest, there were two receivership appointments relating to the Poppyfield property; in the first instance NAMA had receivers appointed to tenants and then it had the same receivers appointed to the landlord, which in John’s view results in a conflict of interest.

Turning to his UK bankruptcy, John said he considered an alternative to bankruptcy which the British call an “Individual Voluntary Arrangement” or IVA which is like our personal insolvency scheme and allows a debtor to work with his creditors over a period to maximize the payback to the creditors but John claims that he has been “advised that NAMA would never, and had by then never, engaged constructively with an IVA”

John goes to some lengths in his affidavit to demonstrate that he tried to work constructively with NAMA, pay back his own exclusive loans and considered other options before finally plumbing for UK bankruptcy. He disputes that he owns the “brand new Porsche” which NAMA’s process servers say they found in John’s parking space at his Gerrard’s Cross apartment block.

With respect to his liabilities, John says that NAMA’s delays with dealing with the properties has led to a devaluation, and he is also unhappy that despite being severally liable with his co-borrowers, he claims, NAMA has only pursued him.

The affidavit provides John’s side of the story only of course, and you should bear that in mind when considering the above. NAMA was asked for comment on the affidavit at 7.30pm this evening and at time of writing there has not been any response. On the face of it, this is serious for NAMA because the Agency has seemingly provided details of acquired loans with par and NAMA values, but more seriously it has listed sums due by third parties unconnected to the debtor. The affidavit is here but the attached table is being withheld for the time being until privacy issues are more fully considered.

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Recently on here, we looked at the annual report of AIB UK Loan Management Limited, which is the NAMA-like unit in AIB in the UK and which manages €5bn of loans compared with NAMA’s €74bn. There is a remarkable contrast between AIB’s accounts and NAMA’s with the latter swamped with foreign exchange gains and losses and revaluations of derivatives.

NAMA’s accounts are difficult enough to analyse in the first place with profit overstated by what appeared in the past to be overly optimistic accounting for interest income and impairments but understated by not including profit on disposals until a debtor connection is closed. I know this will sound convoluted to many of you, but suffice to say it is difficult for an accountant to evaluate NAMA’s financial performance. But let’s try.

Last week, NAMA published its unaudited accounts for 2012. We expect to get the audited accounts in June 2013, and in previous years the loss on impairments has leapt between the unaudited accounts and the final version. In 2011 for example, the impairment loss went from €800m in the unaudited accounts to €1,267m in the final audited accounts published in July 2012. In a parliamentary response last week, Minister Noonan said NAMA’s report would be published “in the next two months” so that would indicate June 2013, which means we might see NAMA questioned in the Oireachtas before TDs and senators repair to the beach.

(1) Profit. NAMA turned in a profit of €306m before tax in 2012, the tax charge was €75m and the profit-after-tax was €231m. This is up from €12m before tax in 2011, there was a tax credit in 2011 of €237m and the profit after tax in 2011 was €249m. So, why was profit before tax €294m better in 2012? The main reasons are impairments fell f

(2) Revenue. NAMA generated €1,387m in revenue in 2012, mostly interest on its loans. This compares to €1,283m in 2011. There was an increase in interest income despite the ECB trimming its main rate to 0.75% in July 2012. NAMA says that 100% of its interest income booked on its loans was received in cash. For those of you who followed the “Effective Interest Rate” saga on here before, that might give you some confidence that NAMA is not over-optimistically booking fantasy income. NAMA’s loans fell from €25.6bn in 2011 to €22.7bn at the end of 2012. And it is not immediately obvious on here why interest income increased in all these circumstances.

(3) Costs. NAMA created bonds in 2010 to buy the €74bn of loans from the banks. NAMA paid the banks €32bn for the loans with these bonds. Since 2010, NAMA has redeemed €4.75bn of these bonds using cash generated in its business. The interest charges in NAMA fell in 2012 to €496m from €512m in 2011. NAMA’s admin expenses in 2012 came to €119m compared to €128m in 2011 with the main reason for the decrease being “portfolio management fees” reducing from €16m in 2011 to €5m in 2012 – now these should be receiver costs but NAMA tells us that receiver costs are charged to the companies in which the receivers operate so it is unclear what these costs are.

(4) Cash. At the end of 2012, NAMA had €3.4bn on hand compared with €3.3bn at the end of 2011. NAMA has recently been required by Minister for Finance Michael Noonan to make up to €1bn of credit available to the special liquidation of IBRC, though that should be repaid. And NAMA is required to redeem another €2.75bn in bonds by the end of 2013 – which, with the €4.75bn redeemed to date will bring total redemptions to €7.5bn – because Minister Noonan unilaterally gave that commitment to the bailout Troika last year. NAMA is still generating significant cash so there should not be any immediate concern about its ability to provide investment funding in its projects.

(5) Impairments. NAMA estimated the value of its loans fell by €518m last year, compared with €1,267m in 2011. Both Irish residential and commercial property declined by 5-6% in 2012, which was less of a decline than previous years. UK commercial property fell 4% and residential property was flat. There is not a perfect correlation between property prices and impairment but there is a relationship and the smaller impairment might reflect a lower rate of decline, but the betting on here is the audited impairment will be around €700m.

(6) Salaries. Given the expected interest, you might have expected NAMA to produce salary costs and employee numbers but no, all we have is that NAMA paid the NTMA €36,890,000 in 2012 and the assumption in here is all of that related to staff costs for what would have been about 250 at year end. So very roughly, the average staff cost would be €147,560 which would include employer pension and PRSI costs.

(7) Disposals of loans and property. NAMA says it disposed of €2.8bn of assets in 2012. In 2011, NAMA “approved” disposals of €5.6bn but it says it did not sell any loans during that year. NAMA booked only €188m profit on disposals in 2012 compared to €550m in 2011. NAMA hasn’t indicated what the unrealized profit reserve was at the end of December 2012, remember that NAMA has an accounting policy of not recognizing profits on disposals until all of a specific developers loans are sold/refinanced/repaid.

(8) Non-performing loans were 82% by reference to par value (NAMA acquired €74bn of par value loans and paid €32bn for them). Although this is up from 80% at the end of 2011, it is the same as the previous quarter, which given that NAMA is disposing of what are widely perceived to be the better quality loans is impressive, if correct. However we don’t know the non-performing loans by reference to the original loan agreement and in the previous quarter these were 15%, so NAMA might be masking the deterioration by negotiating new terms and then classifying the loan as performing under the new terms.

(9) NAMA advanced €308m to borrowers in 2012 compared to €304m in 2011. NAMA says it has approved €1.7bn of advances to borrowers so far, but it not exactly clear where NAMA gets the figures to support its claim that it has advanced €1bn to date to its borrowers with the evidence being that it advanced €240m in 2010, €304m in 2011 and €308m in 2012.

When analyzing the accounts for 2012, one thing did strike me – we live in a society agonizing with the effects of the financial crisis, looking for people and companies to blame, and awaiting with trepidation the next dose of bad news; what struck me is that NAMA did quite well in 2012. Here is a brand-new agency of 250 people generating income of €1.4bn, which has a healthy cash balance and apart from the Enda Farrell affair has largely escaped scandal. Here is a  company which generated €300m of pre-tax profits and certainly kept its costs within budget. It won its battle in London against Paddy McKillen, and kept its nose clean in a country where political interference is rife. There is not very much detail in the management accounts and we await the annual report which appears to be scheduled for publication in June 2013.

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When the KNWL helicopter visited 526 Indian Field Road, Greenwich, Connecticut CT 06830 on 17th April, 2013, there didn’t appear to be anyone at home, and subsequent enquiries indicated that the Dunnes had upped-sticks and moved to another house in the neighbourhood.


It seems though that the bankruptcy court still believes the Dunnes to be resident at 526 Indian Field Road because that is the address that notice was sent by the bankruptcy court yesterday (Sunday, 28th April 2013). The notice is partially reproduced above and the full notice is available here.

We don’t know what the notice issued by the court was. We are awaiting Sean’s statement of financial affairs which was supposed to have been filed with the court by last Saturday 27th April, 2013 after an extension was previously obtained. As of 3pm Dublin time today, there is no such filing available from the US court service, PACER.

The certificate of notice which was filed on the US court service today also indicates that several parties including NAMA and Sean’s bankruptcy lawyer were sent unspecified notices.

This is potentially important because the US courts tend to be strict about addresses provided in bankruptcy cases, though there doesn’t appear to be any doubt that on 29th March 2013, when Sean originally filed for bankruptcy he was still at 526 Indian Field Road, but where is he now?

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It isn’t surprising to see the clarification and apology in the “story of what have you” the Irish Times this morning, following that newspaper’s reporting of the NAMA report issued last week. The Irish Times today says sorry to Ronan King, the accountant formerly at BDO and at the helm of Property Industry Ireland.

Last week, the Irish Times claimed that NAMA had obtained a €559,700 judgment against Ronan. This is what Colm Keena’s report said:


In fact what the NAMA report said was that it had initiated a case against Ronan in Q4,2012 and that the relief sought by NAMA was “judgment in the amount of €559,700.71”.


The case hasn’t yet come before the courts, as far as I can see from the Court Service, so it was premature of the Irish Times to claim that judgment had been obtained. This morning, the newspaper says sorry.

Mind you, it remains unclear why the Irish Times is today saying “Nama (sic) has not applied for judgment against Mr King” because the NAMA report indicates that it has sought a judgment. NAMA was asked for comment on the apparent inconsistency but there has not been a response at time of writing.

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