NAMA - Debt forgiveness for developers.

Z

z107

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So it seems the final piece of the jigsaw has been put in place.

It has been reported that NAMA is entering debt forgiveness talks with a number of property developers.

The Sunday Times has reported that around €37.5bn worth of loans given by banks to these developers will never be recovered.
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http://www.breakingnews.ie/ireland/...forgiveness-talks-with-developers-514906.html


My understanding is that the following happened:
- Property developers got huge loans from Irish banks.
- The property bubble popped.
- Property developers were unable or unwilling to pay back the loans
- Irish banks nearly went bust because of this
- The government introduced the infamous guarantee and NAMA to try to prop up the banks.

- The banks sold the loans to NAMA at a discount, with the taxpayer taking the hit on the discount.
- Property developers should now pay back NAMA
- Nama is now forgiving debt for the property developers.
- Government is increasing taxes, adding new taxes and doing cut backs to help pay for all this.

Is this correct?
 
That just about sums it up.

President Abraham Lincoln

"It is true that you may fool all of the people some of the time;
you can even fool some of the people all of the time;
but you can’t fool all of the people all of the time."

He obviously wasn't thinking about the Irish in 2011!!
 
why should'nt they 'developers' NOT be bailed out! Surely what 'Ireland Inc.' needs now are these 'risk takers', these 'forward thinkers' to get us out of our present predicament.
Is it not time we buried the hatchet, stopped the blame game and get on with it. I mean only the really NAIVE, really thought that they were going to pay anything anyway.
 
umop3p! said:
- The banks sold the loans to NAMA at a discount, with the taxpayer taking the hit on the discount.
- Property developers should now pay back NAMA
- Nama is now forgiving debt for the property developers.
- Government is increasing taxes, adding new taxes and doing cut backs to help pay for all this.

Is this correct?
Click to expand...

I was understanding this debt forgiveness to be part of the discount I.e. That NAMA bought 70bn of loans for 30.5bn, so the discount was c. 40bn, which was the hit that the banks took, which led to a need for recapitalisation, which has largely happened so that this 37bn (or whatever the number might be) is not incremental as long as it remains smaller than the discount amount
 
why should'nt they 'developers' NOT be bailed out! Surely what 'Ireland Inc.' needs now are these 'risk takers', these 'forward thinkers' to get us out of our present predicament.
Is it not time we buried the hatchet, stopped the blame game and get on with it. I mean only the really NAIVE, really thought that they were going to pay anything anyway.
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Property is a dead end for money. The Japanese made the same mistake. You can't export houses and they do not create money or employment. (Rent is not creating anything)

Yes, Ireland does need (calculated) risk takers. However, we need people setting up productive companies that employ people, and maybe even export stuff. It's the people that set up these companies that should be given the breaks and bailouts.

It seems that there wasn't any risk for the developers.. Those that lost our money in the bubble were terrible business people anyway.

(PS, I won't stop the blame game. I'll only forgive and forget when I stop paying USC, property tax, water rates etc, etc... People need to be blamed and punished.)
 
Well it is never as straight forward as it seems... I expect that none of the loans taken over by NAMA are simple and straight forward, so that they can go ahead and just start disposing off property.

I expect that many of the financing deals were very complex and could take years to sort out if handled in the normal way through the courts and then of course there are the actual buildings themselves, no doubt there will be all sorts of claims from subcontractors and suppliers against the buildings as well.

So NAMA has a choice, get tied up in red tape for years or offer come kind of incentive to the developers/builders to cooperate and get the show on the road. It is not unusual for the complete liquidation of a single large company to take years -Who remembers National Aluminium? it seems that it is still in liquidation!

I know it is not fair, but some times commercial reality has to take over. Otherwise the next headlines we'll be seening are ones about how NAMA is spending millions on legal fees!

Jim
 
donee said:
why should'nt they 'developers' NOT be bailed out! Surely what 'Ireland Inc.' needs now are these 'risk takers', these 'forward thinkers' to get us out of our present predicament.
Is it not time we buried the hatchet, stopped the blame game and get on with it. I mean only the really NAIVE, really thought that they were going to pay anything anyway.
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I know where I'd like to bury the hatchet.
Jim2007 said:
I expect that many of the financing deals were very complex and could take years to sort out if handled in the normal way through the courts and then of course there are the actual buildings themselves, no doubt there will be all sorts of claims from subcontractors and suppliers against the buildings as well.
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Why would the involvement of the original developers discourage subcontractors and suppliers from taking legal actions? I find it very hard to believe that paying the original developers was the best or most efficient way to wrap up these deals?
 
Why is it only property companies that are allowed to do this?
 
Complainer said:
Why would the involvement of the original developers discourage subcontractors and suppliers from taking legal actions? I find it very hard to believe that paying the original developers was the best or most efficient way to wrap up these deals?
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Without their cooperation in providing information about what was agreed, providing affidavits and so on, NAMA will have nothing to counter any claims made by subcontractors or suppliers and so would have little choice but to accept such claims without a challenge.

Furthermore, if the developers failed to cooperate, NAMA would more than likely have to go through the process of putting each of the developers companies into liquidation in order to gain full charge of the properties involved. Again this would just add more expenses to the exercise.

And in any case it is not a question of paying them, their companies are for all intense and purposes bankrupt already, so there is little or no chance in recovering the debts that would be written off.

Jim.
 
umop3p!sdn said:
Why is it only property companies that are allowed to do this?
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From a practical point of view I'd expect NAMA will be willing to do a deal with anyone who has something they need - if it is more expedient and cheaper to do so.

I don't like it either, but at the end of the day the objective has to be to extract as much as possible, as cheaply as possible.

Jim.
 
donee said:
why should'nt they 'developers' NOT be bailed out! Surely what 'Ireland Inc.' needs now are these 'risk takers'
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IMO this is pure rubbish. Why on earth should the developers be left off the hook. They borrowed the monbey - they should be forced to pay it back, end of story. And the Bankers that foolishly lent the money and earned all these bonuses should be run down the road. Not a cent of the bonuses has been repaid. But the investors or other non property business owners have not been offered any favours or forgiveness and are been persecuted.

So forward thinking is brilliant if one doesn't use their own money. Sure we could all do this. No risk in playing a game. Many of these developers have legged it to the US, South Africa, the UK, Africa etc. etc., laughing their way from the foreign Banks to collect the money they were given the opportunity to hive off from the books.

At the end of WW2, the NAZIS ran to far away lands something similar to the Irish Property developers. What we need is an Irish version of Simon Wiesenthal, to round up these gangster Bankers and developers who simply fail to honour their commitments.
 
mercman said:
IMO this is pure rubbish. Why on earth should the developers be left off the hook.
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I think that doneee may have had his tongue firmly in his cheek.
Jim2007 said:
From a practical point of view I'd expect NAMA will be willing to do a deal with anyone who has something they need - if it is more expedient and cheaper to do so.
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I don't object to this principle, but how do they know who can do it cheaper, more expedient or better if they haven't gone to the open market. Why have they just assumed that a deal with the original developer is the best option?

Jim2007 said:
Without their cooperation in providing information about what was agreed, providing affidavits and so on, NAMA will have nothing to counter any claims made by subcontractors or suppliers and so would have little choice but to accept such claims without a challenge.

Furthermore, if the developers failed to cooperate, NAMA would more than likely have to go through the process of putting each of the developers companies into liquidation in order to gain full charge of the properties involved. Again this would just add more expenses to the exercise.
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If the only way to get the relevant information was to pay the developers a hefty salary and a profit-share option, then we needed stronger legislation, to make sure that they handed over the information or spent their time in the 'joy until they did.
Jim2007 said:
And in any case it is not a question of paying them, their companies are for all intense and purposes bankrupt already, so there is little or no chance in recovering the debts that would be written off.
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Not true - it is absolutey a question of paying them. The example given shows the developer being paid a six figure salary for helping out NAMA, and the opportunity to profit share in the final outcome. How on earth did they determine that a deal with the developer was the best/only option for this? What alternatives did they consider, such as a deal with the developer's no.2 guy, or the developer's lawyer, or the developer's accountant? Why didn't they do an open market search for the skills and experience that they needed, like any other public sector consultancy contract?
 
donee said:
why should'nt they 'developers' NOT be bailed out! Surely what 'Ireland Inc.' needs now are these 'risk takers', these 'forward thinkers' to get us out of our present predicament.
Is it not time we buried the hatchet, stopped the blame game and get on with it. I mean only the really NAIVE, really thought that they were going to pay anything anyway.
Click to expand...

Heads I win, Tails you lose. Where's the risk?

Ireland needs risk takers and forward thinkers in the primary and secondary industries, not the tertiary industries.
 
mercman said:
At the end of WW2, the NAZIS ran to far away lands something similar to the Irish Property developers. What we need is an Irish version of Simon Wiesenthal, to round up these gangster Bankers and developers who simply fail to honour their commitments.
Click to expand...

So we should not spend millions of the taxpayers funds confirming what we already know - there is not going to be big pay out of this and I certainly would not be will to pay a couple of 100 million just for the feel good factor!

Jim.
 
Complainer said:
Not true - it is absolutey a question of paying them. The example given shows the developer being paid a six figure salary for helping out NAMA, and the opportunity to profit share in the final outcome. How on earth did they determine that a deal with the developer was the best/only option for this? What alternatives did they consider, such as a deal with the developer's no.2 guy, or the developer's lawyer, or the developer's accountant? Why didn't they do an open market search for the skills and experience that they needed, like any other public sector consultancy contract?
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Well first of all at this point, we don't know what if anything has been agreed and given the current climate, I would hope that it is only done in cases where NAMA has no other reason option but to do a deal. I see to situations where a deal could be justified:
  • You need specific information or support from the developer in order to proceed with the disposal of the properties
  • The developer is in a position where he throw up legal road blocks that would keep NAMA in court for years and thus fustrate their ability to proceed with the disposal of the properties in a timely manner.
In both situations there is no other option such as going to the market as you suggest.

Jim.
 
Sorry all i was only trying to see who was awake this morning :D
in a previous life i had a kitchen co and i too got burned and as a consequence had no choice but to burn others, debts that I am now repaying but have no hope of collecting whats owed to me.
But i do think 'we' as a people first and a country second need to move on.
have a good one :)
 
I don't see how debt forgiveness discourages those who made mistakes, from repeating them.
 
Jim2007 said:
Without their cooperation in providing information about what was agreed, providing affidavits and so on, NAMA will have nothing to counter any claims made by subcontractors or suppliers and so would have little choice but to accept such claims without a challenge.

Furthermore, if the developers failed to cooperate, NAMA would more than likely have to go through the process of putting each of the developers companies into liquidation in order to gain full charge of the properties involved. Again this would just add more expenses to the exercise.

And in any case it is not a question of paying them, their companies are for all intense and purposes bankrupt already, so there is little or no chance in recovering the debts that would be written off.

Jim.
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How about a piece of legislation making it a criminal offence for a director not to cooperate fully with the liquidator?
Put the cap at 15 years in prison. Since it’s a criminal offence extradition shouldn’t be too much of a problem.

If that doesn’t work out we could forge some Israeli passports and go and shoot them ;)
 
Purple said:
How about a piece of legislation making it a criminal offence for a director not to cooperate fully with the liquidator?
Put the cap at 15 years in prison. Since it’s a criminal offence extradition shouldn’t be too much of a problem.
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It sounds great, but trying to put it into practice is the issue - how do you know what the guy knows, before he tells you? and how do you prove he knew it in the first place...... And of course if you already what he knew, then you probably would not need his help at all.

I don't know if it is still the case, but back in the days when I worked in this area, a director could be made personally liable for the debts of a company if he continued to trade after he knew the company was insolvent - the problem was how to prove he knew it!!! Unless he did something awful obvious like admit it, there was not much chance of such a case succeeding!

At the end of the day NAMA is not there to investigate crime or punish people, it's there to recover as much as possible, at a reasonable cost and sometimes that means you have to make deals with the devil so to speak.

Jim.
 
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