Can you negotiate with a Vulture Fund?

Many non-performing (or sometimes performing) loans over properties in Ireland and the UK have in recent times been taken over by vulture funds.

A vulture fund invests in properties which are performing poorly and may therefore be undervalued. These funds buy the debt from the bank and effectively step into their shoes in order to recover the loans, whether it is by agreeing a payment structure or appointing a receiver over the assets.

Many Irish investors in properties in the UK now find themselves dealing with vulture funds instead of the banks. But can you reach an agreement with a vulture fund in respect of your outstanding liability or are they a bit more ruthless than your high street bank?

Following a recent decision in the Irish High Court, bargaining chips may be back on the table for some borrowers who want information about their loan when it was sold to the vulture fund.

In the recent case of Eileen Courtney .v. OCM EMRU Debtco DAC, a fund has been ordered by the High Court to provide full details of what it paid for the loan of a specific borrower. The judgment dealt with the borrower’s application to see a copy of the loan purchase agreement so that she could, inter alia, see what price the fund had paid for her loans.

The fund in question argued that what it paid for the loan was confidential. However, the Court stated that what distinguished this case from previous cases seeking disclosure of the purchase price was that the borrower had made a specific offer to the previous loan “owner”, NAMA, to purchase the debt, but the offer was not accepted. The borrower is now arguing that she has an equitable right to redeem the loan for what she initially offered NAMA. Whilst the court did not rule on that argument, and the judgment only dealt with the application to see the loan purchase documentation, it does open the door for the argument to be made that the vulture fund should be forced to accept the offer made to the previous loan “owner”, ie bank. This has not been tested yet in the courts, but it may yet be persuasive to encourage the funds to come to a deal with the borrowers.

Will we see this come across the pond also and translate into the UK courts?

At Meaby & Co, we regularly act for Irish and UK borrowers with property interests in the UK, whose loans have been sold to a vulture fund or who are battling with their bank in relation to outstanding liability. If you have an issue you would like to discuss, please contact Caoimhe Boyce on cboyce@meaby.co.uk.