Vulture Funds: What To Expect and How To Safeguard Your Farm

In a recent interview with the Irish Independent, FPM Debt Recovery Director and Personal Insolvency Practitioner, Gary Digney gives his experience of dealing with Vulture Funds and offers the solution available to farmers, who are struggling with unmanageable farm debt and mortgage arrears and face losing their home and farmland.

The Irish Independent Reports

Vulture funds are largely unwilling to cut deals with farmers to give them more time to repay their debts, even where they would make more money in the long run.

This is according to the leading personal insolvency practitioner (PIP) working in the area of farm debt.

Gary Digney of FPM Accountants said that in around 90% of cases he has been involved in farmers have not sought to have debts written down and in fact just want more time to repay their loans in full.

However, vulture funds have been largely unwilling to agree to this and have instead sought judgments and tried to force land sales, the PIP said.

Both the Irish Farmers Association (IFA) and the Irish Creamery Milk Suppliers Association (ICMSA) have raised concerns over the “short term” approach being taken by such funds, who bought loan portfolios from AIB, Ulster Bank and the former ACC.

Mr Digney said out of 37 farm cases where he has been seeking to restructure debts, only four involved proposals to write off a portion of what was owed.

The rest have just sought extensions of time and a capitalisation of arrears in order to repay the debt.

In those cases the return to the fund [if it agreed to an extension] would be significantly greater than in a receiver sale.

But with the vulture funds, they are not interested in getting paid in full over the next 20 or 30 years. They just want out now. The funds are now seeking to realise their security, which obviously they are entitled to do.

This has been seen lately with land going up for sale on auction sites.

Mr Digney urged farmers to explore the possibility of seeking a personal insolvency arrangement (PIA) as a means of safeguarding their farms.

Debtors can seek court approval for such arrangements if they are objected to by creditors.

Although PIAs have predominantly been associated with keeping debtors in their family home, the mechanism has been used by Mr Digney in two landmark cases involving farms in the past 13 months.

• In the first case a farm couple got court approval for a PIA which allowed them to keep their €1.5m dairy farm.
• In the second case the Circuit Court approved PIAs which restructured their total debts of €522,000, enabling a farm couple in their early 60s to keep their 112-acre farm.