I set out below a link to a recent High Court judgment that has possibly identified a critical flaw in some Receivership appointments.

When a bank/fund appoints a Receiver, it does so by a Deed of Appointment. The Deed needs to be precise and in accordance with the Charge documentation. In the case below, the borrower argued that the fund should have appointed the Insolvency Practitioner as a “Receiver and Manager”. However, the Deed showed that the Insolvency Practitioner was appointed as a “Receiver”, and not as a “Receiver & Manager”.

Certainly in corporate Receiverships, sometimes the banks/funds do not wish to appoint a “Receiver and Manager” if the only worthwhile asset is a freehold property. Appointing a “Receiver and Manager” to a corporate company could involve the Receiver having to deal with employees/creditors/retention of title  etc.

The decision was made at an interlocutory hearing. It will be interesting to see what happens at the full hearing.


A senior banker once justified to me the sale of a portfolio of Non-Performing Loans on the basis that the bank had received “market value” for them. I debated with him whether the bank had actually achieved market value, given that the “market value” was actually being dictated by a small circle of vulture funds, who were seeking to achieve annual returns of 15%. The classic definition of market value is the price to be achieved between a “willing” seller and a “willing” buyer. Unfortunately, the banks have not been “willing” sellers, but have been “forced” sellers due to regulatory pressures, and thus, in my view, have not been achieving full value for their loan sales.

The continuing regulatory pressures are contributing to further loan sales in the Irish market. The significant loan sales by various banks over the Summer included corporate and personal debt. Further loan sales will continue. 

This posting deals with solutions for personal debt, as the solutions for dealing with corporate debt are generally well known. (While the solutions for corporate debt are well known, it takes specialist skills to deal with corporate debt and the frequently attached Personal Guarantees. A successful Examinership can still leave the loan guarantors with significant liabilities.)

In our experience, the first issue initially facing personal borrowers is how they access advice on dealing with their mortgage arrears on the family home. The tendency is to go initially go to the family solicitor. However, some solicitors simply do not have the expertise or experience to properly navigate around loan sales, receivers, mortgages, Codes of Conduct on Lending to SME’s, the Mortgage Arrears Resolution Process, appeals to the Credit Review Office, the Personal Insolvency Act 2012, the Companies Acts, Income Tax, VAT, Capital Gains Tax, Capital Acquisitions Tax, share valuations, members voluntary liquidations, Examinerships, bank offer letters, facility letters, personal guarantees, calculation of Reasonable Living Expenses, re-calculating mortgage payments, cash flow modelling etc. The ideal professional to see is an experienced Personal Insolvency Practitioner (PIP).

However, even selecting a PIP can be problematical, as some PIPs are only authorised to do Personal Insolvency Arrangements (PIAs) or Debt Settlement Agreements (DSAs) and are prohibited from doing “informal” deals, which might be more suitable. Over 90% of the settlements that we achieve are done by “informal” deals. “Informal” simply means that there is no court involvement (unlike PIAs DSAs), and are therefore considerably cheaper to achieve with less publicity. Our ability to proceed with a PIA/DSA enables us to persuade the banks in many cases that an informal deal is better. Accordingly, it is important that the borrower selects a PIP that has the full armoury of solutions, rather than have solutions dictated by the PIP’s regulatory limitations.

The power of PIA’s to keep people in their family homes is tremendous. A PIA can reduce the mortgage down to the market value of the house, reduce the interest rate and extend the term of the mortgage. For obvious reasons PIA’s are not popular with the funds and the banks. There is now extensive case law where the High Court has acknowledged that the one of the primary purposes of the Personal Insolvency Act 2012 is to keep people in their family homes.

A second issue that many borrowers face is that they seek expert advice too late, and before they know it Receivers have been appointed or Re-possession proceedings have commenced.The earlier advice is sought, the more options can be generated.

Issues to consider in dealing with a vulture fund

  1. If a borrower knows that he is going to fall into financial difficulty he should immediately seek professional advice. Advance planning can be very helpful. It is vital that the borrower fully engages with the fund, and trys to stay within the MARP process where applicable. The advisor should review all of the necessary loan documentation including the Letter of Offer and the mortgage itself. The advisor should carry out property searches and review if the charges have been properly registered.
  2. In many cases the borrower will not have retained copies of letters of offer etc. In such cases the borrower should submit a Data Subject Access Request to the original lender so that the advisor has full access to all relevant documents.
  3. One of the challenges facing the funds is that the original lender may have “lost” key documents and thus the lending files are incomplete. As there has been some recent notable High Court judgments involving funds who made poor decisions (e.g. invalidly appointing Receivers) based on incomplete documentation the funds are more likely to proceed cautiously in such cases going forward.
  4. The borrower may feel that if his loan was previously restructured that the fund may not be able to appoint a Receiver provided he keeps up the current payments under the re-structuring. However, this may not be the case, as the fund may claim that they are entitled to appoint a Receiver “at any time” given that the loan had previously gone into default.
  5. I have lost count of the number of clients that believed they had a “verbal” agreement with their bank as to how their loan was to be handled, and that the fund is obliged to honour the verbal agreement. Unfortunately, in the vast majority of cases, verbal agreements have no value. For the reasons why see the following link: https://www.linkedin.com/pulse/why-bankers-verbal-agreement-worth-paper-written-jim-stafford/
  6. I have also lost count of the number of clients who wish to settle for the amount that the fund paid for the loan. That is not going to happen. The amount that the fund paid for the loan is academic: The fund will try and recover as much as they can.
  7. When the borrower is notified of a pending loan sale by his bank and is informed that a business overdraft is to be also transferred, he should consider making an appeal through the Credit Review Office in order to retain the business overdraft. (The vulture fund will not provide overdraft facilities.)
  8. Assess whether the fund is a “short term” fund (i.e. expects to realise all loans within 5 years) or if it is “long term” fund (i.e. expects to stick with the term of the existing mortgages.) “Short term” funds are more inclined to provide prompt debt forgiveness, and are more interested in “lump sum” settlements as opposed to, say, monthly payments over 5 years.
  9. Explore possible “issues” attaching to any charged property, such as existing leases, rights of way, percolation areas, fire safety certs, planning, easements, rights of residence etc
  10. Obtain an auctioneer’s valuation for the property.
  11. Obtain expert advice on tax planning opportunities. In some cases, second mortgages may have been taken out on properties with a low CGT base cost, and thus there will be a CGT liability when the property is sold. If the borrower has CGT losses available elsewhere, then the fund will be receptive to a proposal where those losses could be utilised.
  12. The interest rates on the loans should be carefully reviewed to check if the loans are eligible for the Tracker Redress scheme. For further guidance on the Tracker Redress scheme please see the following link: http://www.frielstafford.ie/assessing-compensation-offers-tracker-interest-claims
  13. Past bank statements should also be reviewed to check if “surcharge” interest has been applied. “Surcharge” interest may only be applied in certain limited cases. In most cases, the rates of surcharge interest applied constitute “penalty” interest and are unenforceable under Irish law.
  14. Seek expert advice on any “old” unsecured loans or Personal Guarantees. In some of these cases, the funds may be unable to issue proceedings on such debt due to the Statute of Limitations. Accordingly, it could be vital that the Statute is not “extended” by acknowledging the debt in writing. See attached link on PG’s: https://www.linkedin.com/pulse/statute-limitations-starting-kick-personal-guarantees-jim-stafford/
  15.  Many of the recent tranches of loans sold are secured on the family home. It may be possible to reduce the mortgage on the family home to its market value, using section 115A of the Personal Insolvency Act 2012. (Section 115A can, in certain circumstances, block a fund’s Veto in a PIA.) A mortgage on the family home that is also cross-secured on buy-to-lets can “block” the appointment of a Receiver to other secured property. By definition, many of the family home loans being sold are eligible for Section 115A as they were either in arrears or had been re-structured at the “relevant” date i.e. 1 January 2015.
  16. Try and determine if the borrower can re-finance the loans. If the properties are in negative equity the vulture fund might accept a re-financing amount equal to the market value of the property. One of the big issues is trying to pay a loan down over 15 years, which is the maximum term the banks will provide. Accordingly, in many cases, “new” monies from family members or friends may need to be introduced.
  17. The big difference between dealing with the funds and the banks is that the funds have no moral hang ups about debt forgiveness, and thus they are faster decision makers. Whilst a prompt decision maker can be helpful in some circumstances, it can also mean that the funds are much faster in appointing Receivers and initiating legal proceedings.
  18. Carefully consider if the borrower has any other debt owed to other financial institutions. If so, the vulture fund might do the borrower a favour and participate in a PIA/DSA and assist in “cramming” down all of the other debts. See such a case study on the following link. https://www.linkedin.com/pulse/how-vulture-fund-saved-family-home-jim-stafford/ 
  19. If other creditors are about to obtain judgment and register Judgment mortgages, it may be critical to instruct a PIP to obtain a Protective Certificate as soon as possible. Even if a Judgment Mortgage is registered, it can be “lifted” if a Protective Certificate is obtained within 3 months from date of registration.
  20. Finally, when the time comes, submit a proposal to the fund. The settlement offer should address all issues with the mortgage, rights of way etc.
  21. If it is not possible to reach a deal or do a PIA, then the borrower might consider the Mortgage to Rent scheme (MTR) i.e. allow the home to be sold and then rent it back. The MTR option is less attractive to investors in rural areas, as the rent achievable would not be attractive enough, and thus borrowers living in some rural arrears will not be able to avail of MTR. In addition, the current valuation caps on MTR houses means that the scheme will not be available for many people. To qualify for MTR the value of the house must not be more than €365,000 in the areas of Dublin, Kildare, Meath, Louth, Cork & Galway, with a limit of €280,000 for elsewhere. The caps on apartments are €310,000 and €215,000 respectively.There are also income limits of between €25,000 and €35,000.
  22. If it is not possible to do a PIA then the borrower might have to defend any re-possession proceedings in the courts. Our general experience is that if borrowers can demonstrate to the court that they can meet all interest payments and make a contribution to capital that the courts are slow to issue a repossession order. We have also found that there can be a dramatic difference between how different courts can treat cases: So keeping a family home can be a geographic lottery. (What some advisors do not know is that a PIA can still be done after a re-possession order has been granted, provided the family are still living in the home. In such cases, it is possible that the fund would only receive a very modest dividend on its legal costs.)
  23. The borrower should not be necessarily be afraid of the fund obtaining judgment. Indeed, one advantage of a court judgment is that interest now only accumulates at 2% per annum. The reality is that the borrower’s credit rating is probably impaired already. Judgments are costly and difficult to enforce. For an understanding of how difficult it is to enforce a judgment mortgage on a family home, see the following link http://www.frielstafford.ie/judgment-mortgages-family-homes-little-value/
  24.  One option to consider is bankruptcy, particularly if the borrower is expecting a significant inheritance in the future.
  25. Keep an eye on possible new legislation which is likely to be of more benefit to the home owner than the funds. There may be amendments to the 2015 Consumer Protection Bill, and there is also the proposed Keeping People in their Homes Bill 2017 and the Affordable Housing and Fair Mortgage Bill 2018. It is expected that the current €3 million cap on PIA’s will finally be lifted.
  26. Keep an eye on High Court/Court of Appeal judgements, as case law is constantly evolving. Some forthcoming judgments will be “fund” specific, such as the Tanager/Kane case, while other cases (such as the case deciding whether a PG has to be”properly sealed” in order for the PG to have a 12 year Statute of Limitation period as opposed to a 6 year period) will have universal applicability.

Are there other steps that a borrower could take in dealing with a vulture fund? Each case depends on its particular facts and circumstances, but there are some tactics that might be applicable. However, it would not be appropriate to discuss such tactics in a public forum such as LinkedIn.

If you have clients. friends, colleagues or family members who require expert advice on dealing with vulture funds, please ask them to contact us and we can advise them on their options for an initial fee of €300 (inclusive of VAT.) Our telephone number is 01 661 4066 and key email addresses are below:




There was a time when some solicitors advising banks on negotiating settlements were very nervous about the implications of the Civil Liability Act 1961. However, as a recent High Court case has indicated, provided the Settlement Agreement is properly crafted, there should be no such concerns.

In Bank of Ireland – v- Doyle a borrower pleaded a Defence that a Settlement Agreement that the bank negotiated with other borrowers was a release or accord for the purposes of s. 17 of the Civil Liability Act 1961, and that he therefore had no further liability to the bank.

Section 17 of the Act of 1961 provides:-

  • “The release of, or accord with, one concurrent wrongdoer shall discharge the others if such release or accord indicates an intention that the others are to be discharged.(2) If no such intention is indicated by such release or accord, the other wrongdoers shall not be discharged but the injured person shall be identified with the person with whom the release or accord is made in any action against the other wrongdoers in accordance with paragraph (h) of subsection (1) of section 35; and in any such action the claim against the other wrongdoers shall be reduced in the amount of the consideration paid for the release or accord, or in any amount by which the release or accord provides that the total claim shall be reduced, or to the extent that the wrongdoer with whom the release or accord…”

In this case, the Court concluded that the terms of clause 10.1, titled “Reservation of Rights”, of the “Debt Resolution Agreement” addressed the issue. Clause 10.1(a) provides:-“For the avoidance of doubt, each Borrower acknowledges and accepts that:-

  • (a) this Agreement shall not in any way impair or prejudice, or be construed as constituting a waiver or release or satisfaction of, any of the Bank’s rights or remedies or in connection with the Finance Documents whether arising under their terms, at law or equity or otherwise…”

“Finance Documents” are defined in the said agreement as including the facility letter pursuant to which the plaintiff made available the loan facility to the defendant and the borrowers. Further, clause 9, entitled “Absolute Bar”, provides that:-“This Agreement may be pleaded and tendered by the Bank as an absolute bar to any defence offered by any defaulting Borrower in any proceedings brought by the Bank in relation to this Agreement or the Finance Documents …”

It was clear to the Court that, based on the wording of the “Debt Resolution Agreement”, that it could not constitute a release or accord for the purposes of s. 17 of the Act of 1961.

The judgment is a welcome clarification of the law in this area.

The judgement itself may be viewed by clicking on the link below.


Chris Lehane, the Official Assignee (“the OA”), gave a very useful talk this morning to the Association of Personal Insolvency Practitioners on the very technical issues arising on dealing with family homes and investment properties in a bankruptcy.

Some of the useful “takeaways” from the talk were the following:

  • The OA has 3 years to deal with the family home.
  • Given that the OA has 3 years to deal with the family home, it was interesting to review his statistics for bankruptcies in 2015. Of the 478 bankruptcy adjudications in 2015, 195 had no interest in a family home, 165 had an interest in a family home which remained in negative equity and which the OA was re-vesting in the Debtor, and only 30 debtors had positive equity.
  • Of the 30 debtors who had positive equity, 14 were resolved “informally”, and the balance to be resolved through solicitors.
  • A cohabiting couple with children, who are not married nor in a civil partnership (as defined under the 2010 Act), are not, for the purposes of the Bankruptcy Acts, residing in a family home nor a shared home. The property is the Bankrupt’s PPR and can be sold by the OA without going to Court.
  • If there is equity in the family home, the OA will provide the spouse with an opportunity to buy the equity. He will accept staged payments up to a maximum of 12/24 months. (The OA did not disclose his negotiating tactics for dealing with the equity in the family home!)
  • The OA will participate in assisting Bankrupts to avail of the Mortgage to Rent Scheme. To date he has only received 18 approaches on the Scheme. My view is that whilst it is possible to participate in the MTR Scheme via bankruptcy, a better solution for some people would be to avail of the Scheme via a Personal Insolvency Arrangement.

Given that many of the current “distressed” loans become distressed shortly after the collapse of Lehman Bothers on 15 September 2008, it is no surprise that many borrowers stopped making any payments on various loans around 2010/2011. As a result of many payments ceasing around 2010/2011, it is also no surprise that the Statute of Limitations defence is being increasingly raised in court proceedings.

One recent such case is Promontoria (Arrow) Limited – v – Burke & ors, where the High Court delivered a judgment on 19 December 2018 in respect of Promontoria’s application for summary judgment.

The Judge stated that it was “significant that the parties were unable to point to any authority on the scope of application of s.36(1)(a) of the Statute and the interplay between that provision and s.11(1)(a).”

Section 11(1)(a) deals with the 6 year statute and s.36(1)(a) deals with the 12 year statute in respect of mortgages/charges.

The judge held that the defendants had an arguable case, so the matter has to go back to the High Court for a determination.

For those of who have clients who are considering using the Statute of Limitations as a defence, then you will find the judgment itself a very useful exposition of the law in this area. For those of you advising banks/vulture funds on issuing demand letters the judgment sets out the pitfalls that can occur given the interplay of s11(1)(a) and s.36(1)(a)

I set out below a link to the judgment.


High Court precedent in dealing with defences of “undue influence” is essentially that a mere assertion by a guarantor of undue influence will not suffice as a Defence, and that the court will consider all of the surrounding circumstances.

I set out below a link to a recent case, Allied Irish Banks Plc -v- Grove Oil (Roscrea) Limited & ors, which is a useful summary of the factors to be considered when assessing undue influence as a defence. In the case the Defendant achieved the threshold of demonstrating that she had an arguable defence and was therefore successful in defending the application for a Summary Judgment. The case should now proceed to plenary hearing (if it is not settled in the meantime.)


(I would mention that sometimes the above link does not display on mobile phones. If that is the case you may need to view this posting from a lap top or a PC.)

Reading the judgment highlights for me the importance of properly interviewing clients and obtaining the full background circumstances to when and how personal guarantees were given. Lay people might not realise that a single comment by a banker at a meeting or over the telephone could have a dramatic impact on the merits of a defending a claim on a PG.

There are two broad ways in which such a shareholder dispute may be handled – the consensual way and the non-consensual way. In theory, shareholder disputes should be the one type of dispute that should be amenable to Mediation, as usually the parties already know each other. We are pleased to say that, in practice, mediation does work well for shareholder disputes.

We are starting to see more shareholder disputes, as the Celtic Tiger roars back to life. During the economic crash, some shareholders had nothing to fight over, whereas now some companies have become very profitable.

We regularly use our mediation/negotiation skills to settle shareholder disputes and cases of oppression of minorities. In this regard we have had extensive experience of using our mediation/negotiation skills to settle cases brought under the old provisions of Section 205 of the 1963 Companies Act, or Section 212 of the 2014 Companies Act. Apart from using our mediation skills, we are able to bring our expert knowledge of company law, accounting, insolvency, share valuations, tax, fraud investigations, pensions and re-structuring to help negotiate a solution.

The key reason why a mediated type solutions works so well in a shareholder dispute is simply that a successful mediation can be a “Win:Win” solution for both sides, whereas a Court Ordered liquidation can generate massive losses for all involved.

There are many ways of settling a shareholder dispute, ranging from one shareholder agreeing to become a “sleeping partner”, issuing a different class of share, making use of tax exemptions on termination payments, a members voluntary liquidation, bringing in new shareholders to the classic solution of the company purchasing back shares.

One of the key determinants in advising clients is establishing (depending on what side of the fence you are advising!) if there is a quasi-partnershipA quasi-partnership argument can be very effective in dealing with a majority shareholder.

In smaller cases effective results may be achieved by threatening to report the conduct of the directors to the Office of the Director of Corporate Enforcement.

One option available under Section 212 of the 2014  Companies Act is to seek compensation from the company. (The previous section, Section 205 of the 1963 Companies Act did not allow compensation.)

The Revenue Commissioners allow certain share buy backs to be treated as a capital type distribution provided the transaction “benefits the trade“. Revenue will normally regard a share buy-back as benefiting the trade where for example:

  • There is a disagreement between the shareholders over the management of the company and that disagreement is having or is expected to have an adverse effect on the company’s trade and where the effect of the transaction is to remove the dissenting shareholder.
  • The purpose is to ensure that an unwilling shareholder who wishes to end his/her association with the company does not sell the shares to someone who might not be acceptable to the other shareholders.

Examples of this would include:

  • An outside shareholder who has provided equity finance and wishes to withdraw that finance.
  • A controlling shareholder who is retiring as a director and wishes to make way for new management.
  • Personal representatives of a deceased shareholder where they wish to realise the value of the shares.
  • A legatee of a deceased shareholder, where she/he does not wish to hold shares in the company.

The Revenue guidance may be accessed here:


Shareholder disputes are very stressful for the shareholders involved. However, appointing an experienced firm of advisors who can set out a road map can help to both reduce the stress and the costs. In particular, we can advise on specific tactics and strategies that should be adopted.

We are experts in the area of resolving shareholder disputes.  We were involved in one of the first Section 212 cases soon after the 2014 Act was passed.  Over the years we have developed a trusted panel of experienced solicitors and barristers who work with us on devising solutions.

If you have any clients who require advice on a shareholder dispute, please ask them to contact Jim Stafford, Tom Murray or Andrew Hendrick.

I recall some years ago a senor banker said to me, very smugly, that “Our previous verbal agreements with your client are not worth the paper they are written on.”

Was the banker legally right in his statement? Yes, he was. The parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties’ agreement.

The Irish Courts have consistently applied the parol rule in the many cases that have come before it in recent years.

What prompted me to make this particular posting was a meeting with a client yesterday who had been told by his Relationship Manager that the bank “would deal with him fairly” once he had sold all of the properties that the bank had a charge on. My client was upset to find that after he had sold all of the properties, that the bank had refused very generous settlement offers (funded by a third party) and were now intent on obtaining judgment against him in respect of the residual debt, with a very aggressive firm of solicitors involved. Unfortunately, he is one of many clients who had been given similar assurances.

Our firm advice in any case involving re-structuring of bank debt is to insist on a written settlement agreement before disposing of any assets. In some cases, the best way to proceed is by way of using a Personal Insolvency Arrangement, particularly if the mortgage on the family home was either in arrears at 1 January 2015 or had been re-structured prior to that date, as Section 115A of the Personal Insolvency Act 2012 could be utilised to “cram down” the debt.

If any of your clients require advice on negotiating settlements with banks and/or vulture funds, please contact myself or Tom Murray

Last month AIB completed the sale of €1.1bn of loans from to Everyday Finance DAC for €800M, a discount on the loans of close to 25pc.

It’s understood most of the loans sold are attached to commercial property and investments after AIB stripped out buy-to-let mortgages, small-to-medium business loans, a number of development loans, and revolving facilities from its original planned sale of Project Redwood.

The borrowers’ loans will transfer to Everyday with effect from 27 July 2018.

Unfortunately, some of our clients who believed (and were led to believe!) that they were close to a final resolution of their debts with AIB have now been notified that their loans have been sold to Everyday i.e. they have been tumbled down the snake back to the very beginning, and now have to start negotiations from scratch again. To say that some of our clients are demoralised is an understatement.

If you have any clients who require expert advice on how to get back on the ladder and achieve a final resolution of their debts, please contact myself or Tom Murray  We are experts at navigating the complex interfaces of family homes, pensions, judgments, shareholdings, property receiverships, Personal Insolvency Arrangements etc

How to deal with compensation offers in respect of Tracker interest claims

We now know that more than 13,000 bank customers were incorrectly charged a wrong rate of interest on their tracker loans by the various banks. The Central bank reported in December 2017 that it had found “material deficiencies in certain lenders’ responses” which had required “robust and sustained” Central Bank intervention.

The banks, including Allied Irish Banks, Bank of Ireland, Ulster Bank, PTSB and KBC are still in the process of identifying affected customers and getting in touch with them. Some customers have already received offers of “redress and compensation”. The “Redress” payment is the amount calculated as being necessary to return the customer to the position they would have been in if the correct rate of interest had been applied. The “Compensation” payment is exactly that, it is compensation.

From the cases that we have seen it appears that the level of “compensation” being offered can vary from 5% to 30%  based on the interest overcharges.  The question is: Should customers accept such redress and compensation in full and final settlement?  Obviously, every case depends on its particular facts and circumstances.  We set out below some of the factors that should be considered when evaluating compensation offers.

Most customers at this stage have been notified of their entitlement to compensation.  However, we believe that some customers, particularly those customers who “switched” to another bank in advance of being notified by their existing bank that their interest rate was about to be increased, may not have been notified of their entitlement to compensation. We also believe that some customers who “switched” banks at the time may be unaware of how valuable their claims for compensation may be.  For example, a customer may have been charged the incorrect rate for, say, just 3 months in 2010 before they switched bank, and may have received a compensation cheque for just those 3 months.  The customer may not realise that he/she is now actually entitled to a tracker mortgage in 2018, and for 8 years compensation!

What was the correct “prevailing” rate?

In many cases the biggest issue is to determine if the bank is correct in deciding what interest rate should apply to a customer who came off a fixed rate. Some banks may argue that it should be “standard” variable rate, whereas in some cases it should be a tracker rate. Frankly speaking, the underlying documentation can be very ambiguous, and it may take some court cases to decide.

Statute of limitations

Technically the banks could have argued that some of the claims are statute barred.  However, as the banks are acknowledging, in writing, the claims then a new period of Statutory Limitations kicks in from the date of the written acknowledgement.

Domino Effect

In some cases the inflated interest charges triggered a loan default which enabled the bank to “call in” the loan and allowed the bank to appoint a Receiver. The losses caused by the “Domino” effect of a bank improperly appointing receivers to properties can be very substantial. In some cases, properties were sold by receivers into a market place where there was no liquidity and thus the properties achieved a low price, in comparison with the value that could be achieved today.

Health Effects

Some people will be able to make claims for stress induced illnesses such as depression, heart problems etc. In some cases, marriages fell apart due to the stress caused.  Such customers may be able to make successful claims for additional compensation in respect of medical bills and damage to health.

Damage to credit ratting

Some people may have found that their access to credit was cut off because of negative reports to the Irish Credit Bureau. This could lead to a claim for defamation, particularly if the customer was refused credit on the basis of an inaccurate credit report.

Costs of finance

Some customers might have been forced to use expensive forms of finance such as credit card debt or money lenders to buy groceries as the normal “household” monies were used to pay unjustified interest charges.

Is customer already adjudicated a bankrupt?

Some of the 13,000 customers who are being offered compensation may already have been adjudicated bankrupt.  If the customer had gone bankrupt because he felt that his situation was hopeless as a result of that particular bank overcharging him, then he may have a substantial claim for compensation.

If the customer is still in bankruptcy whilst the Redress/Compensation is due/received, then an allocation will need to be made between what amount is due for personal damages (pain & suffering) versus breach of contract.  Why is this allocation important? Because the Official Assignee cannot keep what compensation relating to personal injury claims, as such monies belong to the debtor personally.

Is customer going through a PIA?

If the customer had undergone a PIA because he felt that his situation was hopeless as a result of that particular bank overcharging him, then he may have a substantial claim for compensation.

If he is currently going through a PIA with multiple creditors, then any compensation payments may be captured by the “windfall” provisions of the PIA, and thus there may be little motivation for the customer to appeal any settlement offer.

It is possible that some existing PIA’s might require a “Variation”

Can the settlement offer be used to do a PIA/DSA?

Some people have been unable to do a PIA/DSA to date because they had no surplus to offer their creditors after allowing for Reasonable living Expenses. A lumps sum settlement may enable some people to do a PIA/DSA settling all creditors.

Loss of family home

In a limited number of cases people will have lost their family homes as a direct result of being charged incorrect interest rates. Such customers should be entitled to high compensation.

In threat of losing family home?

Some customers may have had such large mortgage difficulties that even if they had retained their tracker rates they may still face the risk of their house being re-possessed.  In such cases we have seen banks just offering to set off the redress and compensation payment against the existing mortgage.  It could be argued that such customers should reject the settlement offer, and thereby make it more difficult for the bank to obtain a re-possession order. Any delays in a re-possession order would give the family time to improve their financial circumstances and possibly do a Personal Insolvency Arrangement.

Should customers avail of the Appeal procedures?

Banks are presently computing redress and compensation payments on a mathematical basis without consulting customers.  Accordingly, banks may be unaware of customers having to resort to expensive finance to meet interest payments or may be unware of medical bills incurred etc.  Accordingly, we believe that most customers should avail of the Appeal procedures to enable the bank to assess such new information.  Like any adjudication process, the best results are obtained with professional advice.

However, those customers with substantial claims might be advised to immediately instruct solicitors to issue a 7 day “Demand” letter and then follow up with legal proceedings. Such an approach can put more pressure on a bank to make a more “reasonable” settlement offer; otherwise they could end up paying both sets of legal costs.

Consequential Losses

Customers may have a “direct” loss attributable to the breach of contract and may also have an “indirect” loss e.g. being unable to finance another investment property. “Indirect” losses are more difficult to calculate and require specialist legal advice.

On-going stress of making appeals

Some people will just want to accept the compensation offered and move on with their lives.  Those who decide to appeal, or to issue legal proceedings, may face ongoing stress until the matter is finally resolved.

Becoming personally liable for legal costs

Those customers who take the decision to take legal action could become liable for both their own legal costs and the bank’s legal costs if they lose.

The banks are very well resourced and will, in our opinion heavily defend any initial legal actions to avoid any legal precedent being set.

In order to be successful in any such legal action it is likely that the customer will need to retain a forensic accountant.  In some cases, for example, the accountant might have to calculate the costs of medical bills incurred as a result of the stress caused, and in preparing such calculations he would have to consider whether the customer obtained tax relief on the medical bills etc.

What information do we need to advise you as to whether you should accept the offer of compensation?

In order to have a full proper assessment of your claim,  we need to consider all of your financial circumstances. In order to do this we would email you an “Interview” form for you to complete in advance of meeting with us. For further information please contact one of us by email on:



Please note that we charge a fee of €300 (inclusive of VAT) for the initial consultation at which time we will outline the various options open to you. If we believe legal proceedings are necessary then we can recommend experienced firms of solicitors to progress your claim for redress and compensation in respect of tracker mortgages.

We are now starting to see more debt recovery cases being successfully challenged on the basis of the Statute of Limitations.

In a Court of Appeal judgment delivered on 6th December 2017, the Court was asked to decide on the issue of a PG being “Signed Sealed and Delivered”

The Defendant argued that the PG bore no seal, and was therefore a document in reality that was not under seal. The significance of this issue is that if the document is an instrument executed under seal a limitation period for the commencement of these proceedings of twelve years applies and they are not statute barred. On the other hand, if it is a document not executed under seal, a limitation period of six years applies, and arguably the proceedings could be statute barred.

In the appeal the defendant argued that the issue of whether the absence of an actual seal on the guarantee and indemnity document, combined with the his averment that he did not seal the document when executing the document, renders it an instrument not executed under seal.

The issue raised  is something which has not as yet been the subject of a judgment in this jurisdiction.

The court directed that the matter be adjourned to plenary hearing, and its outcome will have a significant bearing on many other similar cases.

I set out below a link to the judgment:

ACC Loan Management DAC -v- O’Toole

If you have clients facing calls on personal guarantees or have other debt issues we would be delighted to meet with them and outline their options.

One of the popular ways for banks to deal with mortgages in difficulty is to “warehouse” some of the mortgage and agree with the borrowers that they may pay what they can afford to pay at the time, and pay off the warehoused amount at the end of the extended mortgage term.

The vexed question of warehousing frequently came up in Personal Insolvency Arrangements, with some banks insisting on warehousing if they were to approve a PIA.

Warehousing poses a dilemma for Personal Insolvency Practitioners, as PIPs are required to restore the Debtors to solvency. How could a PIP say that a debtor was restored to solvency if he had a large “warehouse” amount to pay at the end of the mortgage, particularly if the debtor was over, say, the age of 65 at the end of the mortgage.?

In view of the above dilemma, it was only a matter of time before the High Court provided a ruling on the matter. Such a ruling was given on 22 May 2017 in a case involving KBC bank.

The core facts of the case were that KBC were owed €285,000 on a family home with a value of €105,000.  The PIA provided that the mortgage be written down to €120,000, with the balance written off.  KBC objected, and stated that its counter-offer of writing off €15,000 and splitting the mortgage into two components: a “live mortgage” of €135,000 and a “warehoused” mortgage of €135,000 bearing interest at 0% should have been incorporated into the proposal.

The court held that there was nothing in the legislation which prohibits the splitting of a mortgage. The court also held that any individual case will “depend on all the circumstances.”

The court concluded, based on the particular circumstances, that the PIA as formulated by the PIP was not unfairly prejudicial to KBC, and affirmed the Circuit Court Order approving the PIA.

Impact of judgment

The judgment confirms that a well thought and reasoned PIA will be difficult for a creditor to object to. It confirms that the PIP has a “reasonable” degree of latitude in formulating PIAs. It also significantly blunts the main tool of mortgage providers, warehousing, going forward.

I will be presenting a talk next Wednesday morning, 24th May, at Chartered Accountants House, Dublin 2 on Corporate Recovery Strategies. Given that most receivership appointments are currently being made by the vulture funds, I will have a module on how to reach settlements with the vulture funds.

I will also address briefly how the new personal insolvency legislation can help navigate any fall out from Personal Guarantees etc.

I have invited a guest speaker, Ronan McGoldrick of Leman Solicitors, to outline the legal perspective on dealing with the vulture funds. Ronan has considerable experience in dealing with vulture funds, and identifying key negotiating points.


Vulture funds do not generally receive good press. However, when it comes to doing deals, we prefer to deal with vulture funds as they have no moral hang ups about debt forgiveness, they act commercially and they give fast decisions.

I set out below an example of a deal that we recently agreed with a vulture fund, which illustrates their commerciality and decisiveness.

The core facts were that a debtor owed €443,000 to a bank and €8.3 million to the fund. Both debts were unsecured, meaning that the debtor was eligible to do a Debt Settlement Agreement (“DSA”). The debtor’s only substantive asset was a 50% share in the unencumbered family home with a value of €900,000. The debtor had monthly income of €3,111 over and above his Reasonable Living Expenses. A key fact was that the bank was just about to obtain judgment in the High Court, and proceed to register a judgment mortgage against the debtor’s interest in the family home. Whilst the fund had served legal demands on the debtor in respect of the debt of €8.3 million, it had not yet issued proceedings.

The debtor approached us for advice. When we heard that the bank were about to obtain judgement we called the vulture fund and made the following case;

  • If the bank registered their judgment of €443,000 on the debtor’s interest in the family home, they would be no equity remaining for the vulture fund.
  • The debtor’s spouse had limited savings of her own, but she was prepared to use up to €80,000 of those savings to try and do a deal.
  • Doing a deal now would save the fund substantial legal fees in obtaining judgment etc.
  • We said that if the vulture fund agreed to vote in favour of a DSA, that the DSA would pay a dividend of €54,500 to them.

Within 2 days the agents and solicitors for vulture fund evaluated the proposal and agreed to support it.

We then prepared a DSA. The key objective, given that the fund had committed to accepting a dividend of €54,500, in the DSA was to ensure that the bank was not “unfairly prejudiced” by the DSA. If the bank could demonstrate to the High Court that they were unfairly prejudiced, then the DSA would not be approved. We prepared a “Statement of Estimated Outcome” comparing the proposed DSA with the expected outcome in a bankruptcy.  See Statement below.

                                                                           DSA                              Bankruptcy

                                                                          Outcome                        Outcome

50% share of house                                              –                                     405,000

Other Assets                                                      9,882                                    9,882

Income Payments Order                                     –                                       112,012

Contribution from spouse                                 78,065                                     –

Gross Realisations                                          87,947                               526,894

Less Costs                                                         (6,150)                             (89,236)

Net Realisations                                              81,797                              437,658


Payable to bank on claim of €443,891            27,297                                22,297

Payable to fund  on claim of €8,261,532         54,500                               415,361 

81,797                                437,658

We proceeded with the DSA.  The bank voted no against the proposal but the fund voted in favour.  As the DSA only needed a 65% vote to get it over the line, the fund’s vote of 95% was overwhelming. The DSA was subsequently approved by the High Court.

Obviously, what helped in this case was that we were presented with a perfect storm” i.e. the pending registration of the judgment mortgage, which would have meant that there would be virtually no assets left for the vulture fund. Thus the vulture fund acted commercially and decisively, and obtained a dividend of €54,500.

If you have any clients facing a registration of a judgment mortgage against their family homes, and if they have other creditors, they should immediately contact a Personal Insolvency Practitioner to determine what settlement options might be navigated. As can be seen from the above, a pending judgment from one creditor can actually create a “perfect storm” that would allow a PIP to navigate a very cost effective solution.

(The debtor provided his permission to share the above case.)

Some of the country’s best credit managers were left reeling last week following the sudden liquidation of Precision Electric (Ireland) Limited (“the Company”).

The last audited accounts filed for the company for the year ended 31 July 2015 showed net assets of €3.3 million. Given that the Company had traded successfully for some 48 years and had such a strong balance sheet the sudden liquidation shocked many creditors and their professional advisors.

One major creditor, who was owed over €200,000 and who had traded with the Company for decades told the creditors meeting that he would have supported a recovery plan but was not consulted about the Company’s difficulties. Many other creditors echoed similar sentiments. Given that just 10 creditors represented 50% of the unsecured creditors of €3.2 million, obtaining approval for an Examinership could have been straightforward.

It was a creditors meeting that left many creditors and their professional advisors (myself included) frustrated with the lack of information provided by the chairman.

Given that the Company was a sub contractor in the construction industry, much of its work in progress will, in my view, not be collectible in a liquidation..

A successful recovery plan or Examinership could also have saved the taxpayer €987,000 in employees wages and redundancy claims.

It appears that the Company’s directors did not fully appreciate the support that they would have received from creditors for either an orderly wind down or an Examinership. The lesson to be learnt is that creditors will generally be supportive of a recovery plan, as opposed to a liquidation that will destroy the value of assets, and that such recovery plans should be considered before taking the terminal decision to place a company into liquidation.

Having said the above, chairing a creditors meeting is a very stressful, and perhaps the Chairman was simply unable to properly explain the reasons why the Company had to go into liquidation.

Brexit is going to happen. There will be winners and losers. Even though your business might be the “best in its class” with the best management team, best technology etc, it may simply be on the wrong side of the equation when Brexit happens, and no amount of re-structuring or business planning is going to change that equation.

Most businesses that will be affected by Brexit have started work on Plan A, i.e. preparing business plans to deal with Brexit. Some of these plans will work. However, some plans will simply not be financially viable. It is rare that we see a pessimistic business plan!

Some banks, such as Bank of Ireland, will now ask to see customer’s business plans for dealing with Brexit.

Whilst Plan A will work for some businesses, certain businesses should consider Plan B, i.e. either selling the business now, or totally existing the existing business sector and migrating to a new sector.

I recall advising an industrious sub-contractor to the construction sector in early 2008. He had built up a valuable company, but he was concerned about the “construction bubble“. He was determined to cash in his business before he became caught for bad debts. His biggest concern was that if he advised his customers, the Main Contractors, that he was exiting the business that they would not pay him for work being completed. We quickly concluded that he could not sell his business, given the nature of it, and that the best option was an orderly wind down. We devised a simple strategy: He added an extra 20% to his “normal” tender prices for new work, which meant that he did not win any new work. Within 6 months he had completed all contracts, collected all of his debtors, paid off all creditors and we then placed the company into a Members Voluntary Liquidation. He received over €1 million in cash. If he had stayed in the business he would have lost everything.

It is rare that we are given such advance notice of what will be a financial calamity for certain buisnesses. Time is now of the essence.

Whilst we are advising clients on Plan A, we are certainly keeping Option B on the table. In advising Clients on Plan A, we are encouraging them to avail of the €5,000 grant available from Enterprise Ireland for Brexit Planning: see https://ambition.enterprise-ireland.com/axuqhci/

If you have clients that are concerned about Brexit, they may contact me jim.stafford@frielstafford.ie or my partner tom.murray@frielstafford.ie to arrange a meeting to discuss options.

The Courts Act 1981 (Interest on Judgment Debts) Order 2016 (SI No 624 of 2016) came into operation on 1 January 2017. The effect of the Order is to reduce the rate of interest payable on judgment debts from 8% to 2%. The 8% rate had applied since January 1989.
In many cases the rate of interest on judgments was academic, as many debtors were only able to pay a fraction of the actual judgment in any event.  However, for some debtors it will be very welcome news.
I have no doubt that some people will now decide to stop paying creditors who are charging very high rates of interest, and oblige their creditors to consider obtaining judgment where they will only get 2% interest.  Some debtors might use the change to re-negotiate the interest rate on loans etc. Obviously, such debtors would have their credit rating damaged if a judgment was made against them, but their credit rating might have already have been damaged.
I think the 2% rate is too low.  The cost of funding for some creditors would be substantially higher, and thus they may stand to lose money on certain types of business.

Traditionally we have always received the most calls in the month of January from accountants and solicitors asking how their clients should deal with creditor pressure.  This January is proving no different. What is significant about January is that there is usually more creditor pressure from the tax authorities as a result of the VAT liability for November/December becoming payable combined with the balancing PAYE/PRSI/USC liabilities for the year end P35. The hospitality and retail sectors are particularly affected due to low sales in January.

Types of Sheriffs

Trade creditors can obtain judgment and use a sheriff to enforce.The execution procedure is carried out in Dublin and Cork by “private sector” Sheriffs and in other counties by County Registrars.  The Revenue are empowered to confer Sheriff’s power on their own appointees, and they have appointed 16 sheriffs around the country. A major advantage of the sheriff system as far as the Revenue is concerned is that unpaid taxes can be collected by a Revenue Sheriff without the need for judgement being given against the tax payer.

What can be seized?

The Sheriff may seize any goods, chattels, growing crops and any money, bank notes, cheques, bills of exchange, promissory notes, bonds or securities for money belonging to the debtor.

The Sheriff cannot take property belonging to third parties, such as property acquired under hire purchase. Stock which is subject to Reservation of Title claims is a more complex area.

Under Sections 606 and 607 of the 2014 Companies Act (“the Act”), the Sheriff must, after the sale, hold the proceeds for 14 days to allow for notice of a winding up of the company to be served on him. If such notice is served within that time, he must, after the deduction of his costs, pay the balance to the liquidator, who is entitled to retain it as against the execution creditor. If, however, the Sheriff receives notice of the winding up before the sale or the completion of the execution by the receipt or the recovery of the full amount of the levy, he must deliver the goods or any money received to the liquidator without deducting the costs of execution.

How to deal with the Sheriff?

Obviously, it is better to reach arrangements with creditors before sheriffs are instructed so as to avoid the “poundage” costs of the sheriff.

Before the Sheriff makes a visit, it is normal for him to contact the debtor by letter requesting his proposals for payment. The receipt of such a letter is a significant event for the directors of a company, as it is evidence that the company is unable to pay its debts as they fall due. The directors need to consider very carefully if they should continue to trade, as it is possible that they be held personally liable for any new debts incurred by the company.

At this stage the directors, and its business advisors, should consider whether the company is insolvent, and if so should cease trading to avoid the directors being made personally liable for reckless trading. If the company is insolvent and has no prospect of its fortunes reviving then the directors should take immediate steps to place the company into liquidation. A copy of the notice to creditors convening the creditors meeting pursuant to section 587 of the 2014 Companies Act should be sent at the earliest opportunity to the Sheriff. Provided the Sheriff receives this notification within the appropriate time frame then the  creditor, pursuant to  the Act, is not entitled to retain the benefit of any execution. The purpose of the Act is to prevent any one creditor being preferred over another. Another alternative open to the debtor is to invite the bank to appoint a Receiver if the bank has the appropriate debenture.

If the directors considers that the business is viable, but is just suffering from short term cash flow difficulties, then they should open up dialogue with the Sheriff and present positive proposals for settling the debt. If no such proposals are forthcoming, then the Sheriff will visit the premises to seize whatever assets he can.

The Revenue sheriffs are “private sector” self employed individuals. As a result, they can be very pragmatic: It does not pay them to become involved in complex seizures of assets.  The sheriffs have been given authority by the Revenue to negotiate instalment plans of up to 2 years.

The directors should also consider the possibility of examinership.

For further information please contact Jim Stafford or Tom Murray on 01 661 4066 or jim.stafford@frielstafford.ie or tom.murray@frielstafford.ie

I set out below a chart that shows the number of High Court Summary Summons issued by the major banks and vulture funds in 2010 and the projected number for 2016.

2010                         2016

ACC                                                          266                             80

AIB/EBS                                                    716                        1,140

BOI/ICS                                                  1,314                           520

Bank of Scotland                                        124                              0

Cabot                                                            34                           130

Anglo Irish Bank                                            48                              0

Danske                                                          46                           120

PTSB                                                             33                              2

KBC                                                                  5                             30

NAMA                                                               6                               6

Start Mortgages                                              10                             20

Ulster Bank                                                    306                             10

Vulture Funds                                                    6                              76

Totals                                                         2,914                         2,134

Our firm researched the web site of the Courts Service, www.courts.ie, to identify the number of Summary Summons issued.  (A Summary Summons is issued by a plaintiff in the hope of obtaining a “summary” or “quick” judgment.)

Whilst the two years chosen, 2010 and 2016, are not directly comparable, as the jurisdiction limit for High Court cases was raised from €38,092 to €75,000 on 3 February 2014, the chart does show some trends.  Our figures for 2016 are based on the number of summons issued up to 15 November 2016, and then extrapolated to the end of the year.

The above chart reflects the changes that have been on going in the Irish Banking Sector since 2010, with ACC, Anglo, Bank of Scotland and Danske exiting the market place, and also reflects significant loan sales by other banks.

The litigation activity of three banks, ACC, Bank of Ireland and Ulster Bank reduced significantly since 2010.  ACC and Bank of Ireland were, relatively speaking, first out of the blocks in relation to other banks.  Ulster Bank sold the majority of its problem loans to vulture funds and thus is now less active.  AIB are now more active, and are getting tougher in their approach.

Whilst thousands of “informal” deals have been achieved to date, there are still thousands of cases to be resolved. Unfortunately, we are starting to see some previous settlements becoming unravelled for a combination of factors, including unrealistic targets being originally set and the impact of Brexit on certain sectors of the economy. Many more deals will become unravelled if interest rates increase significantly.

The most dramatic change that is taking place is the increasing dominance of the vulture funds.  Given that the vulture funds have purchased over €70 billion of Irish debt, it is not surprising to see them changing the litigation landscape. The vulture funds have been working their way through the loan books, and are now starting to issue proceedings on the more difficult cases. Having said, we do find the vulture funds to be much more pragmatic than the mainstream banks when it comes to debt forgiveness. Vulture funds are reluctant to incur substantial legal costs if a negotiated solution can be achieved. Some banks have a policy of obtaining judgment regardless. Experience has shown that it is easy to obtain judgment, but that the real skill is actually getting paid.

Whilst vulture funds can be slow to issue legal proceedings, they are much faster when it comes to appointing receivers.  I would estimate that over 50% of all receivership appointments are currently being made by the vulture funds.

What we find surprising is the number of people in financial distress who have yet to recognise the benefits of Personal Insolvency Arrangements and Debt Settlement Arrangements. It seems that few people realise that a Judgment Mortgage can be lifted provided a Protective Certificate is obtained within 3 months of the registration date, and that some of the equity could be used to do a deal with all creditors.

I set out below the different ways that people are dealing with their debt issues.

Ignoring it

For certain people, this can be an effective way of dealing with debt, provided the debt is not on a family home.

One lesson I have learnt over the years is that it is easy to obtain judgment: The difficulty is trying to collect it. The difficulty is illustrated by one litigation solicitor acting for one of the major banks who recently told me that he has over one hundred judgments that his firm had obtained for one bank, but which the bank had yet to receive a single cent from any of them.

Some debtors are living with substantial judgments against themselves by “living a second life”, which involves their “businesses” being controlled by a spouse or by children who just pay them enough monies to live on. Such businesses are beyond the reach of creditors, and such arrangements can constitute very effective Capital Acquisitions Tax planning at the same time.

Informal Arrangements

This is by far the most common way of dealing with debt.  Many banks are now prepared to do informal deals. However, there are some banks who will only provide debt forgiveness via a PIA/DSA.

Personal Insolvency Arrangements

PIA’s are a great way to deal with multiple creditors, particularly if the mortgage on the family home was in arrears as at 1 January 2015, as debtors can use the “No Veto” provisions of Section 115A.

Debt Settlement Arrangements

Like PIAs, DSAs are a great way to deal with multiple creditors.


Bankruptcy is the ultimate way of dealing with unsustainable debt.  In some cases, debtors can go bankrupt and still retain their family home.

Personal Insolvency Conference

Chartered Accountants Ireland are holding a Personal Insolvency Conference on 30th November 2016 at Chartered Accountants House.  The cost to attend is €90, and attendance is not limited to chartered accountants.  I set out below the link to the on-line booking site for the conference.:


I set out below the  speakers and content for the Conference, which will discuss in greater depth the various ways that debtors may address their debts.

Jim Stafford, Friel Stafford :   Latest Developments in Personal Insolvency

    • How to deal with vulture funds
    • How to lift the banks’ veto  in Personal Insolvency Arrangements (Section 115A)
    • Latest update on case law
    •  When and how to use the Data Protection Acts

Chris Lehane, Official Assignee

  • What happens the family home in a bankruptcy?
  • How are income payment orders calculated?
  • How are pensions dealt with in a bankruptcy? 

David Hall, Irish Mortgage Holders Organisation  

  • Apart from PIA’s, what other options are open to borrowers who wish to keep their PPR?

Ross Maguire, Senior Counsel,  New Beginning  

  • What asset protection steps may a debtor in financial difficulties take?