A number of US investment funds that bought into Ireland during the recession have trebled the amount of cases taken against debtors already this year.
Subsidiary funds of CarVal, Goldman Sachs and Cerberus have significantly stepped up their legal actions against errant borrowers, an analysis of High Court records shows. Companies connected to the three investors have taken more than 370 court actions so far this year, compared with about 130 in 2016.
The cases, the vast majority of which are seeking summary judgment against borrowers, have been taken against both businesses and individuals.
The three funds were among the most active buyers of Irish loans following the crash. They have taken to the courts with increasing regularity as they work through loan portfolios they acquired.
Actions taken by subsidiaries of CarVal, the investment arm of Minnesota firm Cargill, have risen from about 60 in 2016 to more than 190 in the year to date. The actions were taken through subsidiary property funds — registered as Cheldon, Feniton, Launceston, Pentire and Stapleford — which acquired loans from Permanent TSB, the former Anglo Irish Bank and Lloyds.
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Goldman Sachs also purchased part of the loan book sold by Lloyds bank as part of its disposal of Bank of Scotland (Ireland)’s Irish loan book.
It has increased its litigation activity from about 48 cases taken in 2016 to more than 120 seeking summary judgment this year. The cases were taken by Kenmare Property Finance and Ennis Property Finance, both of which are related to Goldman.
Entities associated with Cerberus have also increased litigation against borrowers threefold. A number of Cerberus companies — which have the word Promontoria in their names — have increased court actions from 22 in 2016 to more than 60. Politicians such as Fianna Fail’s Stephen Donnelly have called for more scrutiny on the funds that bought up distressed Irish loans.
Earlier this year, he warned the exchequer will still lose out on millions of euros a year in untaxed profit as funds use corporate structures to exploit loopholes in the tax code.
“The returns that global distressed debt funds are going to achieve on Irish assets will be among the highest achieved globally from the credit crisis.
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“Early indications from Cerberus on their own investor fundraising roadshows are that the Irish distressed loans will be some of the highest returns ever achieved in Cerberus’s history,” he said.