With Private Equity Firms now closing in on farmland repossessions, it has recently been reported in the media that the Irish Farmers Association (IFA) have requested to all farmers throughout Ireland that they should refrain from getting involved in such sales. This request has not just directly been relied to the farming community but also to non-farmers as well as auctioneers, solicitors and advertisers.
The aim of this requested boycott was to make potential purchasers of repossessed land realise that the goodwill of local people was important. Subsequently, this may well make potential purchasers think twice about becoming involved.
It is quite clear to us, at GDP Equity Experts that existing or pending farmland repossessions are as a direct result of the property crash and the absolute failure of banks to deal with the legacy debt positions. As we are all very much aware on many occasions, it was the banks who were encouraging farmers and others to buy more ground and of course in a rising market you get away with that, however when the music stops, that’s when real problems arise.
Hey presto, and once the property crash occurred nearly 10 years ago now, the value of this existing land fell through the floor, and thousands of farmers were left with huge chunks of debt that has proved to be unsustainable and unserviceable. Over time, mainstream banks, with the intention of improving their balance books, moved on the impaired loans and sold them to Private Equity firms. Subsequently, these firms acted fast and will continue to act fast which is now having serious repercussions across the Irish farming community and beyond. We don’t see any evidence of this decreasing or changing direction in the short to medium term.
What people need to understand from reading this blog is that Private Equity Firms have a completely different business model to mainstream banks. In fact the fundamental difference is that they are not a bank. They buy loans at huge discount and sell them on to existing borrower or anyone else who is prepared to put their hand in their pocket and pay them what they want for it. Therein lies the problem facing Ireland right now.
The funds have been welcomed to Ireland with open arms by the government and are doing what they said they would do all along. We would have the view that one should not be shocked of this approach as its what they do all over the world.
What can I do now?
Our team at GDP have been working with these private equity funds now for over three years, for the most part very successfully. We understand what they want, their mind-set and their business model. It is important if you are a borrower that you also have an understanding of how they operate as if you don’t and decide upon the wrong strategy, then that could be fatal in terms of your own aspirations of holding onto any property or business you might have.
Whether you have a residential, farming or business loan that has been sold on or that may be sold on in the future then it is essential that you are fully prepared and have the right strategy in place form the off. We have settled quite a few cases in the last few years and at the point of writing are involved in several of these kinds of scenarios.
What we can do to help?
GDP Equity Experts have helped hundreds of families, individuals and businesses deal with debt related issues including loan sales. We have been leading the way in this specific matter over the last few years and have particular expertise in dealing with private equity firms.
We would like the opportunity to share this with you. As a result, our team are more than ready to engage and assist if you have been affected by this or you have any other property debt related issues.
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