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.
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.