Firms owned by investment fund Cerberus raised more than €113m last year in boom-era loans bought from Irish banks and the state after the financial crash.
New York-based Cerberus was one of the biggest buyers of Irish property debt as the Republic and its banks grappled with the long-term consequences of a 2008 crash that left the state in dire straits of a bailout.
Figures recently filed with the Companies Office show that three of the entities Cerberus set up here to buy loans raised a total of €113.6 million from debtors in 2021.
Purchasing the debt allowed the fund to collect repayments due or take control of the properties and other assets used to secure the loans. In most cases, he purchased the liabilities for fractions of the totals actually owed.
Promontoria Finn, which in 2015 paid 305 million euros to Ulster Bank for hundreds of loans secured by homes and businesses, collected 25.8 million euros from debtors last year, according to its accounts.
The company has repaid 21.9 million euros of a loan split 75/25 between JP Morgan Stanley and Austrian lender Bawag. As of December 31, these banks owed 34.8 million euros.
In July 2017, they provided Promontoria Finn with a €197 million senior secured loan, meaning it is secured by the company’s assets and is repayable before any other debt in the event liquidation of the company. The company itself lost €690,000 last year.
Promontoria Aran raised €62.8m in 2021, according to the figures. In 2015, the company paid €1.35 billion to Ulster Bank for loans on secured properties in the Republic, Northern Ireland and Great Britain. Debtors owed the bank a total of £4.8 billion (€5.7 billion).
The company repaid 51.5 million euros of a senior loan to Deutsche Bank, from whom it borrowed 900 million euros to buy the loans. Promontoria Aran then refinanced this debt with the same lender. The company recorded a profit of 3.8 million euros last year.
It also repaid €1 million of a €300 million loan owed to its shareholder, a Dutch subsidiary of Cerberus, Promontoria Holding 128 BV.
Debtors of Promontoria Aran included promoter Mick Wallace, now a Member of the European Parliament, who owed Ulster Bank €2million. During his time as an independent TD, Mr Wallace was a harsh critic of so-called vulture funds.
He pointed to the Project Eagle controversy which Cerberus became embroiled in after paying €1.6bn to the National Asset Management Agency (Nama) for debts owed by borrowers in Northern Ireland.
Questions about the deal have sparked parliamentary inquiries on both sides of the border and a criminal investigation in the North. It emerged that £7million was transferred from Belfast Tughan’s law firm, which worked on the deal, to the Isle of Man and then returned to the firm, which had no knowledge of the deal .
Belfast businessman Frank Cushnahan will stand trial for fraud, while lawyer and former Tughan managing partner Ian Coulter will stand trial for misrepresentation, following the criminal investigation. Both plead not guilty. Cerberus and Nama deny any wrongdoing.
Promontoria Arrow collected 25 million euros from debtors last year, figures show. In 2015, the company paid Nama €739.2 million for home loans mainly in Ireland and Great Britain. The total amount owed on the loans was €6.25 billion.
During the year, Promontoria Arrow repaid €16.6 million on a Deutsche Bank senior secured loan for a total amount of €55.9 million. The company made a profit of €77,830 last year.
Cerberus has given all companies used to buy Irish debt the label “Promontoria”. The US fund holds them all through subsidiaries registered in the Netherlands. Dutch companies and several banks lent them money to buy the loans.
Initially, this allowed Cerberus companies based in Ireland to take advantage of a tax break designed to attract global property investors here.
This allowed these businesses to deduct the cost of borrowing to pay the loans from their tax liabilities, reducing them to negligible amounts.
However, the Oireachtas later amended this provision, Section 110 of the Tax Consolidation Act, closing the loophole for Cerberus and other funds.