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Archive for April 18th, 2013

PBN2012

Despite the little stumble with NAMA foreclosing on the loans of a developer who is bessie mates with a certain political party in Northern Ireland, the hastily-issued NAMA promise to spend €11m developing 100 homes in that party’s stronghold appears to have had a placating effect. It just shows you how diplomatic you need to when dealing with certain people.

Today, we have the report and accounts – available here – for PBN Property Limited for the year ended June 2012 in which the company heaps praise on the NAMA scheme, though also points out that NAMA hasn’t yet approved its business plan. PBN Property Limited is an important company in the PBN group, understood to be one of NAMA’s largest debtors in Northern Ireland, which is controlled by Paddy Kearney (“P”), Brian McConville (“B”) and former Anglo Northern Ireland boss, Neil Adair (“N”) though it is noteworthy that Neil resigned as a director of PBN Property Limited on 15th March 2013.

The company had sales of GBP 7.9m (€9.5m) though racked up a loss of GBP 0.4m though interestingly there is no writedown on its property holdings. It has GBP 162m of property-related assets but is balance sheet insolvent to the tune of GBP 4m. It has 12 employees paid GBP 333,000 in total.

PBN says today “the Directors welcome both the adventof this Irish government initiated bank asset relief agency which has both the time and resources to support the full exploitation of the Group’s asset base and NAMA’s responsible and measured approach to the property and construction industry in Northern Ireland” It also notes that it has submitted a “detailed” business plan to NAMA and that it continues to interact with NAMA to maximize the inherent long term economic value to be derived from the Group’s asset base.

Contrast that approach to the one adopted in 2010 when PBN lambasted the Republic’s banks and lack of lending and support generally.

Today of course PBN is in a straitened position with a small loss last year, an insolvent balance sheet and an audit opinion which is qualified for the not-unusual reason that it is nigh impossible to place a value on property assets at present.

Still, no harm in being diplomatic.

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Remember the fear that NAMA was going to turn into a gravy train for professionals? Here’s the breakdown of the €21.68m of legal fees paid by the Agency in 2012. All aboard!

Row Labels Sum of Amount€k
McCann Fitzgerald 2,007
A&L Goodbody Solicitors 1,495
Arthur Cox 1,401
Hogan Lovells International 1,287
William Fry Solicitors 1,246
Eversheds O’Donnell Sweeney 1,185
DLA Piper UK 1,019
Simmons & Simmons 840
Byrne Wallace 714
Matheson Ormsby Prentice 662
Maples And Calder 623
Beauchamps Solicitors 512
Taylor Wessing 446
Wragge & Co 442
Ronan Daly Jermyn Solicitors 414
Paul Sreenan 396
Servulo & Associados 393
Gartlan Furey Solicitors 382
Cian Ferriter 375
Hayes Solicitors 304
Eugene F Collins 290
Stroock & Stroock & Lavan 275
Whitney Moore Solicitors 260
Quarles & Brady 222
McCarter & English 221
Arthur Cox Northern Ireland 201
Gordons Commercial Solicitors 190
Lavelle Coleman Solicitors 178
K & L Gates 167
Addleshaw Goddard 131
Allen & Overy 126
DLA Piper (Paris) 125
Snr Denton Uk 125
Mason Hayes + Curran 114
Alfred Thornton & Company 112
Eversheds 109
Taylor Wessing (Paris) 100
Altana 98
Appleby (Isle Of Man) 92
Mc Dowell Purcell Solicitors 91
A & L Goodbody Northern Ireland 82
John McKee & Son Solicitors 72
Cassels Brock & Blackwell 72
Tughans Solicitors 71
Bedell Cristin 64
Andrew Crean-Lynch Solicitors 64
Cms Cameron Mckenna 60
Windels Marx Lane & Mittendorf 58
Graf Von Westphalen 57
Olswang 54
Ogier 51
Parker, Hudson, Rainer & Dobbs 46
Linklaters 44
Elvinger, Hoss & Prussen 42
Barry C. Galvin & Son Solicitors 40
James Doherty BL 39
G O Nuallain & Co 38
Wildgen 38
Taylor Wessing (Munchen) 37
LK Shields Solicitors 36
DLA Piper UK (Manchester) 36
Private Security (Ireland) Limited 34
EC Harris Built Asset Consultancy 32
Vieira De Almeida & Associados 32
Mary Fay BL 28
Mark Sanfey 26
Appleby (British Virgin Islands) 25
Allen & Gledhill 22
Michael McDowell S.C 22
J.W. ODonovan Solicitors 21
Taylor Wessing (Hamburg) 21
Ciaran Lewis 21
Deacy Gilligan Ltd. 19
Hibernian Legal International Ltd 19
Andrew Fitzpatrick BL 19
John Breslin BL 19
Eoin Mccullough 19
Taylor Wessing LLP 19
Nathy Dunleavy 18
Herbert Smith Paris 18
Landwell Pricewaterhousecoopers Tax&Legal Services 18
Carey Olsen 18
Quarles & Brady LLP 18
Owen Hickey Senior Counsel 17
Herrick Feinstein 17
Garrigues 17
Rossa Fanning BL 16
Tods Murray 16
Knight Frank (Dublin) 16
Jarlath Ryan 15
P.J. O Driscoll & Sons 15
Herbert Smith 15
DLA Piper UK LLP (Germany) 15
Allen & Overy (Aisa) Pte Ltd 14
Garcia-Torrent & Garcia Cueto 14
Robert Fitzpatrick BL 14
Control Solutions 14
A.C. Forde & Co Solicitors 13
Boyanov & Co 13
IFM Trust Limited 13
JLT Ireland 13
Peden & Reid Solicitors 12
DWF 12
Arendt & Medernach 12
Allen & Overy 12
O’Flynn Exhams Solicitors 12
Carson Mcdowell 11
William Abrahamson, BL 10
Camilleri Preziosi 10
Malone O Regan Environmental Services Ltd 10
Orpen Franks Solicitors 10
Cains 10
Mckenna Durkan Solicitors 10
Lopez Balina – Miras S.C.P. 9
Cort & Cort 9
Clifford Chance 9
Wierzbowski Eversheds 9
Karole Cuddihy BL 9
JPA Brenson Lawlor Limited 9
Dillon Eustace 8
Aon Risk Solutions 8
Uria Menedez 8
Loyens & Loeff 8
Forgo, Damjanovic & Partners Law Firm 8
Gore & Grimes Solicitors 7
DLA Piper (Poland) 7
Kelly Walsh Property Advisors & Agents 7
Simmons & Simmons Llp (Amsterdam) 7
Gavin Ralston Senior Counsel 7
CB Richard Ellis (Gbp) Ltd 7
First Ireland Risk Management 6
Vision Net 6
C&H Jefferson Solicitors 6
Kane Tuohy Solicitors 6
Shook Lin & Bok Llp 6
Cyril Oneill 6
McGill Planning Ltd 6
Abacus II 5
Bernadette Kirby 5
Sanderson Weatherall Llp 5
Peter Fitzpatrick & Company 5
Walkers 4
DLA Piper UK LLP (Belgium) 4
Woods Hogan Solicitors 4
DMH Stallard Llp 4
Triay & Triay 4
Aspect Consulting 4
John Redmond 4
Carrroll Kelly & Oconnor Solicitors 4
Salans & Associes 4
Stevens & Bolton Llp 4
Loncar & Andric 3
Ronan Kennedy BL 3
John Spain Associates 3
Miley & Miley Solicitors 3
Kromann Reumert 3
Millar McCall Wylie Llp 3
McGuire Desmond Solicitors 3
K Tech Security Ltd 3
Eoin Clifford 3
Cheeswrights Notories Public 3
ICSA Software International 3
Appleby (St Helier- Jersey) 3
Lambert Smith Hampton 2
Kingsbury 2
Nabarro 2
Corporate Access (Legal Services) Ltd 2
Burges Salmon Llp 2
DLA Piper Prague Llp 2
Davis Langdon 2
Turley Associates Ltd 2
Polish Properties Sp.Z.O.O 2
DLA Piper UK 2
Gaftarnik, Le Douarin & Associes 2
MMP Project Management 2
RB Legal Services Limited 1
Richard Kearney Engineering Ltd. 1
BJ Associes Sarl 1
Rochford Brady Legal Services Ltd 1
Cassels Brock & Blackwell 1
MKB Russells Solicitors 1
DLA Piper Uk LLP (Liverpool) 1
BTO Brechin Tidal Oatts Solicitors 1
BTW Shiells Commercial Property Consultants 1
Walsh Associates 1
Gwen Malone 1
TLT LLP 1
Marston Book Services Ltd 1
Grand Total 21,668

NAMA says that the €21.68m comprises three distinct elements, there’s €3.28m which NAMA has charged to its own accounts for its own activities, there’s €0.68m in due diligence costs which NAMA expects to charge the banks and there’s an almost laughable €17.7m which NAMA says it hopes to recover from its developers.

Top of the table is McCann Fitzgerald whose fees from NAMA topped €2m. There are law firms all over the globe including McCarter and English, which was paid €221,000 and you’ll recall this is the US law firm engaged by NAMA in pursuit of Sean Dunne and his wife Gayle. NAMA has in the past assured us that it has a reasonable prospect of recovering the sums charged to the developers but with most developers severely under water, you’d have to be skeptical. And remember that whilst NAMA gets away with convincing its auditors that these sums chargeable to developers are really recoverable then NAMA is allowed keep these costs off its books so it doesn’t affect profit.

There are firms from exotic locales like the British Virgin Islands, the Channel Islands and the Isle of Man as well as Asia and central Europe and in the UK, DLA Piper was paid €1,019,000 in 2012.

NAMA paid two Dublin barristers almost €400,000 each (!) Paul Sreenan was paid €396,000. Here’s Paul at the Law Library having a little smile.

NotShelteredHonest

And a somewhat more serious Cian Ferriter who was only paid €375,000.

CroesusAKACian

The information was provided in a response to parliamentary question from the Sinn Fein finance spokesperson Pearse Doherty, by the Minister for Finance Michael Noonan. The PQ is available here, I’m not copying it below because of formatting issues.

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The good news is that there is plenty of room in the rear of trucks and lorries going BACK into North Korea so if you hurry, you might just be able to escape to a less intrusive regime while there’s still time. The bad news is that today, Ireland enhances its reputation as a world laughing stock for its idiocratic public administration with the launch of personal insolvency rules that will see the State setting guidelines for personal expenditure on food, clothes, holidays, cars and in fact, will allow the State peer into every nook-and-cranny of your life. We might laugh at mass displays of boiler-suited communists marching in formation before a baby-faced despot, all with oversized hats and punching the air;  they’ll be having a laugh at what we’ve just done. In North Korea they might punish citizens for not looking sad enough when a Dear Leader expires, in Ireland you’re allowed €28.97 per week for so-called “social inclusion activities”.

Ireland has a colossal public and private debt problem. We have an economy that has slipped back into recession, a deficit of over 7%, unemployment of over 14%, emigration of over 80,000 per annum in a country of just 4.6m and the IMF are in keeping a daily watch over our finances. As a country, our gross debt:GDP is forecast to rise to 121% in 2013, our gross debt:GNP is over 140%. Private borrowing ballooned in the last decade partly to fund property acquisition and speculation, partly for consumer spending. The State has taken over most of the banking sector and is now, ultimately, the main creditor for many people. Now the economy has contracted by nearly 10% and the invoice has finally arrived in the post. And we can’t pay.

Up to now, the only avenue available for heavily indebted citizens was a domestic bankruptcy which lasted 12 years and was practically unavailable. Or emigrate and file for bankruptcy elsewhere or live a half-life under the whip-hand of your creditors.

At the end of 2012, we passed into law the Personal Insolvency Act which provides a more modern set of solutions, but the Act has not been commenced yet and won’t be until June. Today, we find out the detail of what the new Act will entail even if it will be another three months before anyone can actually use any of the new processes. The new quango, the Insolvency Service of Ireland has launched its  website which provides detail on how the new solutions will work. What will have them rolling in the aisles internationally are the detailed rules on living expenses allowed during the insolvency period which is set between 12 months and 6 years.

The guidelines are here. Here’s an extract.

HasItComeToThis

And yes, of course under “education” they couldn’t even spell “stationery”.

Stationary

The long-held view on here is that we import a template from an established democracy to allow quick and cheap bankruptcy which is in the interests of our economy generally, not to mention our society. What we have is going to be very expensive with a burgeoning personal insolvency industry and most heavily indebted people will still be better off emigrating. The level of intrusion into peoples’ lives for between 1-6 years is world-beating.

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It is truly remarkable that more than two months after the special liquidation of Irish Bank Resolution Corporation that the smoke is only now beginning to clear on some very important aspects of the liquidation.

In the Dail this week, the Independent TD for Wicklow and East Carlow Stephen Donnelly asked Minister for Finance Michael Noonan about exposure of Irish pension funds to the liquidation at IBRC. You will not be surprised to learn that after the repayment of 10s of billions of euros to bondholders, domestic pension funds are indeed now exposed to losses. Thankfully the losses would appear to be capped at €1m, but in his response, the Minister set out the pecking order of creditors to be repaid and it is (with the top ranking at 1)

(1) Preferred creditors

(2) debt purchased by NAMA from the Central Bank

(3) “if there are proceeds available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors” which apparently includes part of the pension fund deposits at IBRC (by the way, if your pension fund had no-notice deposits at IBRC, it might be an idea to demand an explanation as to the actions of your pension fund)

In February 2013, Minister Noonan directed NAMA to buy IBRC debt at the Central Bank and NAMA issued €15bn of state guaranteed bonds to buy the charge over €15bn of IBRC assets held at the Central Bank.

Here is the IMF schematic of the IBRC liquidation.

So, it is now NAMA that is exposed to losses on these bonds, and the estimate on here is that IBRC’s assets were worth €1-3bn less than their book values in February 2013. This is beginning to look maverick, ah-hoc despite being planned since last October 2012 and amateurish, and worse, Minister Noonan refuses to provide us with the meat of the NAMA directions. But what we do know, is that bondholders covered by the ELG are being paid €933m ahead of NAMA which we own – according to the March Exchequer Statement, €933m was provided to IBRC by the Government on our behalf in March 2013.

This is just crazy.

The full parliamentary questions and response are below (with my emphasis added) and available at the Oireachtas website here.

Deputy Stephen S. Donnelly the total value of Irish pension funds on deposit, or in any other financial product, on the books of the Irish Bank Resolution Corporation at the time of liquidation under the Irish Bank Resolution Corporation Bill 2013; and if he will make a statement on the matter.

Deputy Stephen S. Donnelly the total write-down in the value of Irish pension funds due to the liquidation of the Irish Bank Resolution Corporation under the Irish Bank Resolution Corporation Bill 2013; and if he will make a statement on the matter.

Deputy Stephen S. Donnelly the number of individual pension funds, that is persons, affected by the liquidation of the Irish Bank Resolution Corporation under the Irish Bank Resolution Corporation Bill 2013; and if he will make a statement on the matter.

Deputy Stephen S. Donnelly if he will publish the analysis done prior to the liquidation of the Irish Bank Resolution Corporation under the Irish Bank Resolution Corporation Bill 2013 on the effect of the liquidation on Irish pension funds held by IBRC; and if he will make a statement on the matter

Minister for Finance, Michael Noonan: I propose to take Questions Nos. 275 to 278, inclusive, together.

As the Deputy is aware, I am not in a position to advise on the specifics of any accounts with IBRC (in liquidation). I have been informed that there are a number of customer accounts that may not be entitled to full compensation under the deposit guarantee scheme, DGS, or the eligible liabilities guarantee scheme, ELG, due to the nature of the products or deposit options in which those account holders invested. At the time that such products were offered there was no additional guarantee provided by the State in respect of those products. It was always the case that the ELG scheme covered only those liabilities which were entered into during the issuance window.

I have been advised that the total value of Irish pension funds placed on deposit with Irish Bank Resolution Corporation at the time of liquidation was in the region of €1m. This could exclude any funds placed on deposit with the Bank in client accounts opened on behalf of beneficiaries, where these beneficiaries are Irish pension funds. The total value of Irish pension fund deposits is currently under review with the respective Guarantee Scheme Operators, regarding consideration for payment under the respective schemes. The total number of individual pension funds with funds placed on deposit with Irish Bank Resolution Corporation at the time of liquidation was 23. Again, this could exclude any pension funds who are the beneficiaries of client accounts opened on their behalf.

Through the liquidation process, the proceeds from the disposal of IBRC’s assets will be used to repay creditors in accordance with normal Companies Acts priorities and consequently, preferred creditors will be paid first and then debt purchased by NAMA from the Central Bank will be paid. If there are proceeds available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors. This would include depositors to the extent that their deposits are unguaranteed.

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