Thursday July 08 2010

LENDERS, the taxman and ordinary businesses used the courts to chase unpaid debts of more than €1bn over the first six months of the year, the Irish Independent can reveal.
The massive figure covers all judgments granted over the six-month period and marks a 400pc increase on 2009's activity as soaring defaults triggered an increasing aggressive response from creditors.
The figures, prepared by debt monitor 'Stubbs Gazette', exclude duplications that arise where a single judgment is granted separately against several investors who guaranteed the debt.
The biggest increase in activity was at the Commercial Court, where the value of summary judgments surged by almost 800pc to €415.7m, as big names like Bernard McNamara and hotelier Hugh O'Regan were chased.
"The Commercial Courts are seeing an unprecedented number of debt cases," James Treacy, of 'Stubbs Gazette', said, adding that many directors were finding their personal guarantees coming back to haunt them.
Registered judgments -- the most advanced form of debt pursuit short of enforcement action -- were up more than 500pc to €512m. Lower-level judgments granted outside the Commercial Court but not registered were up just 3pc to €100m. "The massive increase in activity in registered judgments indicates that debtors are digging their heels in and are unlikely to settle judgments against them by consent," said Mr Treacy. "We can expect to see a rush of enforcement activity such as repossessions."
The banks were the most active debt chasers, with nationalised Anglo Irish Bank having more than €155m granted in its favour. The €155m was spread across just 11 debtors, including the €37.5m judgment granted against hotelier Hugh O'Regan in May.
The next biggest judgment haul went to Bank of Ireland, which was granted judgments worth €116m after chasing 1,687 cases through the courts, followed by Bank of Scotland (Ireland)'s €74m and Allied Irish Bank's €44m.
Damaging
The country's credit unions were also active on the debt front, securing 1,626 judgments totalling close to €21m, while several international banks also featured prominently.
As well as damaging the credit ratings of the debtors involved, judgments empower creditors to apply for judgment mortgages against specific assets or instalment orders against income streams.
The figures for the first half of 2010, however, show that just €170m worth of judgments were "satisfied" or discharged over the period, implying a hit rate of about 1.7pc.
"The enforcement of judgments remains problematic simply on the basis that people do not have the money to support the size of the sum represented by the judgment," said Graham Kenny, partner with legal firm Lyons Kenny.
"A slow realisation is occurring that many of these judgments are useless." Against that backdrop, Mr Kenny said lending institutions were "giving consideration" to "create solutions that were unheard of in times gone by".
"Banks have not displayed a particular appetite after judgments have been obtained to push people into bankruptcy," he said, adding that there had been a "very clear increase in the number of receiverships, where banks will adopt the dual approach of securing their assets by the appointment of a receiver and seek judgment also."

- Laura Noonan

Irish Independent