Vulture funds protest
Vulture funds renew efforts to take possession of indebted farms
Funds and lenders are following a more aggressive strategy since the end of Covid-19 moratorium on forced sales
by Declan O'Brien
A surge in forced farm sales by vulture funds has been reported by personal insolvency practitioners (PIPs) and the farm organisations.
A more aggressive approach by lenders since the end of the Covid-19 related moratorium on forced sales has resulted in more properties being put on the market.
The ICMSA also complained this week of the “disturbing and wholly unacceptable” practice whereby farms are being sold by vulture funds without any prior notice being given to the owners.
Balbriggan-based PIP, Gary Digney, said he has seen a marked increase in attempted forced sales by the vulture funds over the last two months.
Action by lenders on many contested farm loans was delayed by the Covid-19 pandemic, Mr Digney explained. However, he said more farms have been put up for sale by vulture funds over the last two months.
Mr Digney, who is a director with PKF-FPM Accountants, said he had halted a number of forced sales in recent weeks, and was seeking to prevent another five over the next fortnight.
“These sales are happening right around the country,” he said.
To-date Mr Digney has successfully halted forced farm sales by applying for Protective Certificates under the personal insolvency arrangement (PIA) legislation.
The actions taken by Mr Digney’s firm, where successful, offer the farm owners protection from their debtors for up to 70 days.
This gives time to put in place a proposal to pay the debt over a longer period using the PIA legislation, Mr Digney explained.
Where the vulture fund or other lenders do not agree with the terms of the PIA, the courts have the power to force them to comply in given circumstances.
In a landmark case taken earlier this year such protection was afforded to a family in Co Roscommon who had defaulted on debts owed to Danske Bank. Under the PIA solution agreed by the court the farm’s debts will now be paid over 20 years.
“The vulture funds do not like the PIA route because it prevents a quick sale of the farm,” Mr Digney said.
He explained that vulture funds are attracted to the purchase of farm debt because the sale of any associated land offers a guaranteed and relatively risk-free return on their investment.
“Vulture funds are not interested in the farm debts being paid off over 20 years. They want to get the properties sold and secure an early return for their investment,” Mr Digney said.
However, the application of PIA legislation in the area of farm debt has complicated matters and offers a new pathway for heavily indebted farm families to retain their properties.
Mr Digney said the process will not work in all cases but that it certainly offers hope and a possible solution for many farmers.
ICMSA president, Pat McCormack, accused creditor institutions of moving aggressively over the last month to liquidate properties or farms which are heavily indebted.
“We just think that there has to be a certain level of decency in these matters and certainly in cases where people are unaware of the fact that their homes or farms are being advertised for sale without their knowledge.
“We don’t think that standard is being met,” Mr McCormack said.
“The practice of selling or advertising for sale an indebted property without the express knowledge of the debtors has to be made illegal and if legislation is required then that will have to be effected,” he added.