Archive for the ‘Non-Irish property’ Category

The reserved judgment in the Paddy McKillen
appeal hearing in London is due any day now
IBF mortgage drawdowns for Q1,2013 due
Central Bank arrears/repossessions Q1,2013 due
Monday 13th May 2013
Eurogroup meeting Brussels
Tuesday 14th May 2013
EcoFin meeting Brussels
Wednesday 15th May 2013
Allsop Space auction in Shelbourne Hotel, Dublin
IPD UK commercial property indices April 2013
(CSO) Agricultural Price Indices March 2013
(CSO) Industrial Disputes Quarter 1 2013
Educn & Soc Protection Oireachtas comm: rent allowance
Thursday 16th May 2013
(CSO) Goods Exports and Imports March 2013
KBC Ireland Q1,2013 results
ECB Governing Council meeting
Good Friday Agreemt Oireachtas comm: Narrow Water Bridge
Friday 17th May 2013
(CSO) Trade Statistics February 2013

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It should be said upfront that Eddie Hobbs’s Brendan Investments Property Management has issued a statement here in which it states that it is aware of legal action against a Michigan USA company called “Metro Property Group” but stresses that there is no claim or alleged impropriety being made against Brendan Investments. Brendan Investments is jointly owned by Eddie Hobbs, Dermot Flanagan, Hugh O’Neill and Vincent Regan, with each being a director. The company in its statement expresses confidence in the US company now being sued.

This week in a Michigan District Court, a group of investors represented by celebrity lawyer Deborah Schlussel has filed a case alleging serious misconduct by a Michigan property company, Metro Property Group and associated companies and individuals. The 116-page complaint is here and it makes for fascinating reading. In brief, a group of UK, Australian and Yemeni investors are claiming shenanigans on the part of Metro and others and want their investment back. Finance and economics pundit and TV personality Eddie Hobbs (50) is dragged into it because his company Brendan Investments has apparently teamed up – “partnered” according to the lawsuit claim – with Metro for property investment, though again, to stress, there is no allegation of any impropriety on the part of Eddie or his company.

The lawsuit does however refer to Brendan Investments and claims it has “recently partnered” with Metro with Brendan Investments “reportedly” providing what is called “an infusion of €15m”. A request for comment from Brendan Investments was made before 5pm today, but was not responded to at time of writing. There is comment reported in the old media from Hugh O’Neill, a director of Brendan,  who says “there are a number of inaccurate references to Brendan Investments in the filing.” Ms Schlussel, the lawyer representing the plaintiffs, was asked for information relating to the alleged €15m infusion by Eddie’s firm, and again, there has not been any comment at time of writing.

So, what’s the beef? It is alleged that Metro buy extremely run-down houses in Detroit for between USD 500-5,000 and that they sell them to investors for USD 40,000-50,000 promising impressive returns of, for example, 16.9% per annum from rent alone, that the buildings aren’t habitable, that Metro manage the properties and after a few months, a tenant who may be a fake stops paying rent and the investors are left with dud property and no income. It is also alleged the buildings aren’t “up to code” and that investors have been fined by state authorities because of the condition of the properties.  The complaint is written in colourful language and paints the Metro Property Group as a bunch of villains, accusing it of operating a Ponzi scheme “reaching mini-Madoff proportions”. It even suggests that profits from the alleged scam may have ended up with Iranian-backed Lebanese political and military group, Hezbollah, a group regarded as terrorists in the US.

There is no filing in the case, on Metro’s part yet but newspaper reporting carries comment from Metro that it says the action is unfounded and that Metro is confident the case will be thrown out of court. One of the defendants is a lawyer, Tarek Baydoun who has provided comment to the media and says “allegations of any wrongdoing are completely ludicrous” and “I’m firmly denying any wrongdoing whatsoever” The colourful language in the lawsuit probably won’t do much for its credibility over here where we’re used to more sober allegations, but having said that, there are very specific – and presumably easy to prove or disprove – allegations in the lawsuit which paint a worrisome picture, and although there is no allegation of impropriety whatsoever against Eddie’s Brendan Investments, he may find himself fielding questions about the safety of investments with this US company.

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It has been relatively quiet this week with Sean Dunne’s bankruptcy in the Connecticut bankruptcy court – the creditors meeting that was scheduled for Wednesday has been moved to 29th May 2013 apparently at NAMA’s request, though given it had one working day to review Sean’s statement of affairs filed at 10pm last Friday, perhaps that request was understandable even if they had seen practically all of the information before when Sean presented NAMA with his business plan and accompanying documentation. The bankruptcy trustee was also scheduled to have quizzed Credit Suisse, People’s United Bank and a Bruce Shaw employee, Andy Smyth, this week.

Last night, Sean did file a “means-test calculation statement” which is intended to set out in detail the income and expenses of the bankrupt. However, in Sean’s case, he unsurprisingly states that his debts are not primarily consumer debts, and is therefore exempted from providing the minutiae of his financial income and outgoings. For your information though, the statement is here.

Also yesterday, NAMA’s lawyers, New Jersey firm, McCarter and English filed a statement – available here – with the Connecticut bankruptcy court showing that NAMA’s lawyer Thomas Goodwin is a lawyer is “good standing” and should therefore be accepted as NAMA’s legal representative in the Connecticut bankruptcy.

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In the Dail this week, Minister for Finance Michael Noonan provided details of the PR expenditure at the  NTMA, an umbrella agency which encompasses NAMA. We learned that Gordon MRM, the PR agency most associated with NAMA, received just over €200,000 a year during the past three years or a total of €660,000 to the end of February 2013. This company was re-appointed to the role after a competitive tender process involving four other companies, at the end of 2012. It has done a reasonable job of promoting NAMA during the past three years, and it must be said that aside from the Enda Farrell affair, NAMA has emerged reasonably unscathed in terms of its reputation, though credit for that clean sheet is broad-based. If only Gordon MRM could gets its archive of press releases on its website to work…

But what was unexpected in Minister Noonan’s response is the NTMA has also engaged the British PR company which is the respondent in a Paddy McKillen defamation action in Dublin’s High Court. Powerscourt has been paid just over €250,000 in the last 3.5 years by the NTMA though €160,000 was spent in 2010 alone. On 27th February 2013, developer and businessman, Paddy sued Powerscourt and one of its executives, Conal Walsh in Dublin’s High Court.

A statement was made by Powerscourt on 30th November 2012 on behalf of the Barclays – the two brothers fighting to take control of three London hotels in which Paddy McKillen has a 36% stake – a statement which contained something which Paddy regards as, according to the Sunday Independent, “defamatory of him as they questioned his motivation for bringing proceedings before the UK Court of Appeal” in the latter half of 2012. You might recall that following Paddy’s defeat in the London High Court last August 2012, he was firstly hit with legal costs which have been estimated at €25m. We learned from the Sunday Times recently that Paddy sought what was described as an emergency loan of GBP 5-5.9m last October 2012 at IBRC; approval for that loan application was given by IBRC though it seems that Paddy funded those partial legal costs from elsewhere. Paddy sought, and was granted, permission to appeal the UK High Court judgment, the appeal was heard at the start of February 2013 and a judgment is expected any day now.

Paddy is, at present, complaining that there is what is described by the Irish Times as a “sustained strategy” against him involving NAMA and the Department of Finance. The NTMA’s engagement of Powerscourt may just exacerbate that sense of grievance Paddy is suing associates of the Barclays as well as Powerscourt and its executive for defamation in Dublin. Separately, he is suing NAMA for breach of confidentiality and privacy. He has launched legal action against the Sunday Times and one of its journalists Mark Tighe over a story which a judge has partly injuncted. And any day now, he will learn the outcome of his appeal against a UK High Court decision.

The NTMA expenditure on PR emerged from parliamentary questions asked by the Sinn Fein jobs and enterprise spokesperson, Peadar Toibin and are here:

Deputy Peadar Tóibín: To ask the Minister for Finance if he will provide, in tabular form, a list public relations companies that received payments from either the National Assets Management Agency, the National Treasury Management Agency, the National Development Finance Agency, the State Claims Agency or the National Pension Reserve Fund; the overall cost of these payments from each agency named and the level of payments made by each agency to each company listed in respect of work carried in the years 2010, 2011, 2012 and to date in 2013. [21365/13]

Deputy Peadar Tóibín:To ask the Minister for Finance the number of companies or individuals that recently tendered for the renewal of the public relations contract for the National Treasury Management Agency; and if the NTMA secured a reduction in the rate charged in the previous contract. [21366/13]

Minister for Finance, Michael Noonan: I propose to take Questions Nos. 145 and 146 together.

The National Treasury Management Agency (NTMA) does not maintain an internal press office. Instead, its internal communications resources are supported by an external service provider (appointed following a public procurement process) – currently Gordon MRM – in order to offer a full press office and communications service (including out-of-hours contacts for the media) across all the NTMA’s business areas: Debt Management, National Asset Management Agency (NAMA), National Pensions Reserve Fund, National Development Finance Agency, State Claims Agency, NewERA and, during 2010 and 2011, the Banking Unit.

These arrangements were initially put in place during 2010 in light of a significant increase in the volume of domestic and international media queries being received by the NTMA and associated bodies. In September 2012 the NTMA retendered for the provision of these services. A total of five companies submitted tenders. Following the tender evaluation process the NTMA awarded the contract to Gordon MRM in December 2012.

The initial contract, in place to end-2012, was based on an hourly rate for services provided. During the term of this contract a 20% reduction in the hourly rate was agreed with effect from June 2011 until the end of the contract. The new contract, which commenced in January 2013, is based on a fixed fee and it is anticipated that this will result in a significant reduction in the overall fees paid by the NTMA.

NAMA draws on the NTMA’s shared services in a number of areas including its outsourced press office facility. NAMA reimburses the NTMA in respect of the costs of these services attributable to NAMA.

The overall costs incurred for the provision of the services above (excluding VAT) were as follows:

2010 – €207,255*

2011 – €205,388 (of which €112,353 was charged to NAMA)

2012 – €223,723 (of which €142,653 was charged to NAMA)

2013 – €24,488 (to end-February) (of which €12,000 was charged to NAMA).

* In 2010 costs were not specifically attributed to NAMA. NAMA was charged a proportionate share of the NTMA’s third party service costs which included Gordon MRM.

In the light of the sovereign debt crisis the NTMA also engaged Powerscourt – a London based communications consultancy – for international communications initiatives in the funding and debt management area. Total costs (excluding VAT) incurred for the provision of the services provided by Powerscourt were as follows:

2010 – €160,334

2011 – €74,395

2012 – €10,257

2013 – €12,103 (to end-February).

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“An Individual Voluntary Arrangement* would have produced a much greater financial return to NAMA and my other creditors. However, I have been advised that NAMA would never, and had by then never, engaged constructively with an IVA and so my only real option, in the absence of being able to satisfy the demand was to petition for bankruptcy. “ Businessman John  Fraher’s affidavit in his unsuccessful defence against NAMA’s application for a €5.9m judgment

This may not be a first, but it is the first that has made it into the media. Kerry developer John Cahillane is attempting to negotiate what the Brits call an Individual Voluntary Arrangement or “IVA” – see below* for summary explanation. This is an alternative to bankruptcy and is roughly akin to our Personal Insolvency Arrangement which allows for assets to be disposed of, for the debtor to work with their creditors over a period of time, and to provide what would usually be a better result for creditors.

In John’s case, he claims that if he files for bankruptcy, his unsecured creditors will receive 0c in the euro but through an IVA they will receive about 13.5c in the euro. John Cahillane says he has assets of €56m and liabilities of €73m. This is a Part 1 of a 2-part blogpost, Part 2 tomorrow will examine the IVA proposal in detail but in essence, John is trying to get NAMA to accept that its recourse is only to the property securing the loans, and John is saying he will make a €60k-odd contribution to the IVA from third party contributions – maybe from his wife, but that doesn’t appear to be specified – and from equity in his family home.

NAMA moved against John’s company in December 2011, having KPMG appointed as receivers to Cloonbeg Developers Limited. It would appear from the IVA that John subsequently relocated to the UK, his present address is in Kilburn, north London and he says he informed his creditors of this relocation in January 2013. He is presently employed as a business development executive with Purcell Development Services Limited, a new company in which John “identifies new development and construction projects for investors in the UK and Europe”.

John’s property businesses were based in Ireland (mostly Kerry, it seems), Portugal, mainland Spain, the Canary Island and Cape Verde.

John’s biggest creditor at €54m is NAMA following NAMA’s acquisition of AIB loans, and NAMA has apparently taken a negative position on the IVA proposal. This is seemingly a policy stance at NAMA, because John Fraher in a completely unrelated court matter last week, said in his affidavit that NAMA won’t entertain IVAs. NAMA was asked today to comment on its position on this IVA proposal, and also about its general stance towards IVAs. There has been no response at time of writing.

Other creditors, apart from NAMA, which comprise a minority of the €73m of debts, are more supportive – creditors in a Cape Verde scheme apparently owed €11m are supportive. There is a creditors meeting scheduled for Friday 10th May 2012 in London to determine the way forward. The London City branch of English accountancy firm, MHA MacIntyre Davis is acting on behalf of John Unfortunately John needs 75% of his creditors to agree to the proposal, and the scheme will fail unless NAMA accepts it.

What is an IVA?

Alternative to bankruptcy, akin to our personal insolvency scheme, but has very significant differences.

Term, can be days but typically is for five years, six if the IVA doesn’t force the sale of the family home

Assets and liabilities, like a bankruptcy, most assets are generally liquidated to pay the liabilities.

Pension pots, generally protected.

Family home. If your home is worth more than its mortgage, usually you’re required to re-mortgage and pay the equity into the IVA. If you can’t then your IVA period may be increased by 12 months.

Income. Like the personal insolvency scheme, you work out with your Insolvency practitioner, or IVA practitioner, what you need to live on and the rest gets paid into the IVA, which pays the practitioner and your creditors.

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Just in this evening, the US court system PACER is indicating that the creditors meeting in the Sean Dunne bankruptcy that was scheduled for this Wednesday 8th May, 2013 is now “off”. PACER indicates that there is a statement adjourning the meeting together with a “hearing off” statement. Neither document has been uploaded to PACER yet, so we don’t yet know the details or if a new hearing has been scheduled.

At this stage, it is too early to read much into the development, we don’t know why the meeting has been adjourned or at who’s request, Sean’s, the bankruptcy trustees or some other party or the judge.

Hopefully the documents will become available soon on PACER and will be brought to you here.

UPDATE (1): 6th May, 2013.  The new date for the creditors meeting is 29th May 2013 at 10am (EDT) at the premises of the trustee, Richard Coan.

UPDATE (2): 6th May, 2013. It is understood the postponement was at the request of NAMA and it seems NAMA has sought more time to digest the statement of affairs filed on Friday night.

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The reserved judgment in the Paddy McKillen
appeal hearing in London is due any day now
Monday 6th May 2013
Holiday in Ireland and UK
Tuesday 7th May 2013
(CSO) Vehicles licensed for the first time April 2013
(CSO) Mthly Services Index Mar 2013 (Provl) Feb 2013 (Final)
Troika review scheduled to conclude
Agriculture Oireachtas committee – Coillte sale
Wednesday 8th May 2013
(CSO) Crops and Livestock Survey June 2012
Finance Oireachtas committee – Pre-ECOFIN Min Finance
Sean Dunne creditors meeting Connecticut
Thursday 9th May 2013
(CSO) Consumer Price Index April 2013
Friday 10th May 2013
Central Bank provisional banking figures April 2013

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