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Archive for May 14th, 2013

SpotlightDebt

They’re still celebrating on Ormeau Avenue in Belfast after winning a BAFTA on Sunday for their powerful documentary “Shame of the Catholic Church” broadcast under the “This World” strand, this comes after winning an IFTA last year for the BBC Spotlight special on tracing the Quinn family assets around the globe. The Spotlight on the horse meat scandal this year was probably the best investigation that we saw, and a couple of weeks later, the Department of Agriculture withdrew a license from one of the meat companies featured.Tonight promises us another cracker – this time on the personal debt crisis and debt forgiveness. It will be on at 22.35 this evening for 30 minutes on BBC Northern Ireland. You should then be able to catch it on BBC iPlayer but if you’re watching online from the Republic or outside the UK, you will need fool the BBC into thinking your PC is in the UK, and you can do that with so-called proxy masking software, this one is recommended for general use.

The programme was previewed on Northern Ireland radio this morning, and it seems we are set to learn from presenter Ciaran Tracey that in Northern Ireland, which has a population of just 1.8m people, a total of GBP 1.7m (€2bn) was written off as a result of bankruptcies in 2011 and 2012. Yes, €2bn. Pro-rataed for our 4.7m population that would equate to €5.2bn over two years and remember we have a huge pent-up demand for resolving our personal debts. It seems that some 3,200 people in Northern Ireland filed for bankruptcy last year. Minister for Justice, Alan Shatter thinks that we will have 3,000 bankruptcies in the first 12 months of operation of the new Personal Insolvency Act from July this year.

The programme will also feature contributions from Nick Leeson, new recruit to debt advice company, GDP and best known to us for the thankless task of managing Galway United Football Club, though the rest of the world might know him better as the man who brought down Barings Bank in the 1990s. Nick’s company is helping the indebted deal with creditors, mostly banks, and it seems that debt deals are being done.

Almost as a footnote, despite its relevance to NAMA, the programme also has a contribution from the Northern Ireland Minister for Finance and Personnel, Sammy Wilson who criticizes the banks, Ulster Bank in particular, for not lending to businesses and he calls for a bad bank, a NAMA in fact in his own words, to be established to acquire Ulster Bank’s bad loans, so that the bank can return to its core business of lending.

It promises to be a cracker. 22.35 BBC Northern Ireland.

UPDATE: 15th May, 2013. The programme is available in two parts on Youtube – Part 1 here and Part 2 here.

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The “independent valuation” of IBRC’s loans by PwC and UBS was originally supposed to be completed by May, but that might slip to June – remember NAMA still hasn’t got EC approval for 40% of its acquisitions from 2010, so this plan to value loans which had a par value of €27bn last June 2012 and a book value of €16bn, looks ambitious. When the “independent valuations” are complete, that is when the IBRC Special Liquidator will offer the loans to the market. Some borrowers are trying to refinance their loans now before the loans are valued and offered to the market, but they need repay 100% and meet any other contractual payments required under the loan agreements.

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One IBRC borrower who doesn’t look like he can refinance his loans 100% is star of the original production of the Dragons Den format on the BBC, Duncan Bannatyne (pictured above). If you’re not familiar with Duncan, he’s like our own Ben Dunne minus the coke and the prossies, having successfully built up a chain of fitness centres, though he has a varied background which includes mobile ice cream sales, nursing homes, kindergartens and writing. He is most recognized in the UK as one of the original investors and business angels on the BBC’s Dragons Den.

The Daily Mail today claims that Duncan has loans with IBRC and suggests that he might owe them GBP 122m (€144m). On Twitter this morning, Duncan is disputing claims made in the Daily Mail article

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but states that he is trying to refinance part of a loan with IBRC, repaying 100% including all contractually owed amounts on that part. He doesn’t indicate what the “part” is but he does say that he hasn’t personal guarantees

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and has only the one loan

DBNoAllOneLoanand is offering to pay all contractually due fees and interest on the part of the loan he is trying to refinance

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The Daily Mail this morning reports that Duncan was originally advanced the loan in 2006 by what was then Anglo, to buy 24 health clubs from the Hilton group.

Duncan is now in the same boat as Paddy McKillen, Denis O’Brien and a slew of other borrowers who have a window to refinance their loans at 100% or else face having to bid for their own loans and possibly – in the case of Paddy McKillen at least – see their loans sold to business rivals. And any unsold loans will eventually end up in NAMA, something that Paddy McKillen at least wanted to avoid at all costs previously.

Paddy McKillen has been making headlines recently with his well-publicised bid to refinance €179m of his loans at par. Paddy is understood to owe IBRC around €900m comprising €300m of personal borrowings and €550m of corporate borrowings. He was attempting to refinance part of these loans at 100% but says that the Special Liquidator insisted he pay 100% of the €179m loan plus €7m early repayment fees, and although Paddy says he was prepared to pay the former, he wasn’t prepared to pay the latter.

It is unclear why Duncan would only offer to repay part of his loan. Presumably it would give him greater leverage over the underlying health clubs, and it might deter bidders when the remainder of the loan is offered to the market. On the latter point, Duncan claims that no-one has been appointed to value his loan.

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He didn’t respond to a Tweet that both UBS and PwC have been appointed by the Special Liquidator of IBRC, to value loans generally. KPMG won’t want to comment on a specific loan but it is understood that the option offered by KPMG to borrowers for refinancing of a borrower position is to refinance it at par.

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