It must surely strike most people as odd that, as part of the forthcoming personal insolvency arrangements, the names, addresses and dates of birth of those availing of the arrangements will be a public document, whilst at the same time, the State writes off billions in debt owed by wealthy individuals and companies.
Take Thomas Crosbie Holdings (TCH), the media group which publishes newspapers like the Irish Examiner and Sunday Business Post and operates local radio stations. The bulk of this company was sold in a so-called “prepack receivership” in March 2013. The buyers were two of the Crosbie family, Tom and Ted, which controlled the original Thomas Crosbie Holdings and the business wasn’t placed on the open market and many smaller creditors weren’t consulted. Another part of the original group which includes the Sunday Business Post was placed in examinership and the betting is the Crosbies will buy this part also, though as a minority part of a consortium which will be controlled by the Irish Times.
We don’t have precise accounts for TCH just before the events of March 2013, but it is understood it owed AIB about €28m. We, that is, the State, owns 99.8% of AIB and we have shoveled €21bn into AIB/EBS to bail it out. We also don’t know what writedown was given to TCH as part of the receivership and which will be given to the lump in examinership, but the likelihood is that is will be over €10m.
So, if you are a Merchant Prince who has undergone a process which has cost the State millions, you escape any naming-and-shaming and indeed, in time, you get to boast how great a businessman you are for restructuring your debt after disastrous decisions to expand during the 2000s.
But, if you have a €300,000 mortgage with Ulster Bank which relates to a property that is now worth €200,000 and you enter into a six year personal insolvency arrangement and pay back €60,000 during this time and at the end of the six year period, you get a debt writedown of €40,000 then your name will be immortalized in a public register. And you haven’t cost the State a cent because Ulster Bank is not financially supported by the State. Yet, having likely cost AIB millions, the Crosbies are Jack-the-Lads.
Separately, NAMA has said that it will work with certain developers over a period of years to see their debts reduced, but that when it is satisfied with the compliance of the debtor and that all assets have been accounted for, it may write off debt. These will be developers with personal liabilities, perhaps as a result of providing personal guarantees. But again, there will be no public register of such individuals who will have millions, if not billions, written off. And again, written off with a direct cost to the State.
During the week, the Sinn Fein finance spokesperson Pearse Doherty asked Minister for Finance Michael Noonan about the debt write-off at AIB, and you won’t be surprised that Minister Noonan claimed “data protection”. And for interest, the enterprise minister, Richard Bruton was asked about pre-pack receiverships and said concerns about the process were being considered by his Department. The questions are below, but it seems “data protection” won’t protect the hoi polloi in the forthcoming personal insolvency arrangements.
Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm the sum owed by the Thomas Crosbie group to Allied Irish Banks, in which he owns 99.8% of the shares, immediately prior to the receivership and examinership of companies within the group in March 2013; and if any write-down of debt has been provided to the group as part of the group’s receivership and examinership.
Minister for Finance, Michael Noonan: The Bank has informed me that due to data protection rules and confidentiality AIB is not in a position to discuss details of individual customer circumstances.
Deputy Pearse Doherty: To ask the Minister for Jobs, Enterprise and Innovation his plans to examine the so called prepack receiverships to address concerns that companies are being bought out of debt by their existing owners, with limited marketing of the business to other potential buyers, whilst smaller creditors are being excluded from the process.
Minister for Jobs, Enterprise and Innovation, Richard Bruton: At the moment, my immediate priority in the company law area is to work for an early enactment of the Companies Bill 2012, which was published on the 21st of December last and is due to begin its passage through this House next week. Once on the statute book, the Companies Bill will introduce a modern company law code for Ireland and bring significant benefits to business. The Bill has been many years in the making and I am keen now to have it in force at the earliest opportunity.
However, I am aware of the issues that the Deputy has raised with regard to the conduct of receiverships and I have asked my officials to give them consideration.