Corporate Restructuring
Summit
Tom Kavanagh
kavanaghfennell
27th September 2012
Contents
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Statistics
Headline Cases
Restructuring
Sale of Loan Books
Bite Size Deals
NAMA
Borrower Resistance
Retail Receiverships
Examinership
Personal Insolvency Bill
Other Issues
Outlook for the next 12 months
www.InsolvencyJournal.ie
Statistics
295
19
284
16
225
Corporate
Receiverships
16
Examinerships
Jan to Sept 2012
Predicted 2012 total: 1,700+
2011
Liquidations
2010
2011 overall total: 1,638
*statistics do not include personal asset receivership
source-www.insolvencyjournal.ie
Headline Cases
• Construction / Development sector:
• Treasury Holdings; Maplewood; Deane Homes; Robert Butler
companies; Cleary Doyle; WM Bennett
• Waste Disposal Sector:
• Binman; Greenstar
• Retail Sector:
• Clery’s; Guiney’s; Awear
• Hospitality Sector:
• Ashford Castle; Radisson Blu Athlone; Glenlo Abbey; Lyrath
Estate
• Motor and Transport:
• Target Express; E.P Mooney & Co; Aran Link; Fastnet Line
Headline Cases
• Examinerships:
• Eircom; Atlantic Homecare; Cappoquinn Chickens
• Bankruptcy cases:
• Sean Quinn; Thomas McFeely; Brian O'Donnell;
Paddy Shovlin; Ray Grehan
Restructuring
• Bank Inaction
• Fear of negotiating individual deals
• Portfolio Effect
• Inaction in itself is encouraging strategic
default
• A problem of Capital – mortgage books
• Counterparty matters
• Pillar Banks / Foreign Owned Banks /
NAMA
Restructuring
• Media & Political Influence
• NAMA politically accountable
• Media and Blogasphere
comment
• Restructure Problems
• Limited Refinance options
• Debt Forgiveness / Red face clauses
Sale of Loan Books
• Various Loan Books for Sale >€2bn
• Purchasers may include:
-
Kennedy Wilson
Goldman Sachs
Pepper International
Blackstone / GSO
Lone Star
-
Deutsche Bank
Oaktree Capital
Cerberus
Fortress
TPG
Sale of Loan Books - Issues
• Vendor
• Bank offloads distressed book for cash
• Avoid on-going:
• Case management costs
• Asset holding costs
• Dealing with legacy debt
• Purchaser
• Price offers value for money
• Ability to cut deals on commercial terms
• No issues with debt forgiveness
Bite Size Deals
• Larger deals - Morrisson Hotel / Riverside 2 /
Warrington Place [Staple Finance]
• €1m to €5m deals
• Large element of cash
• Market being tested
– Palmerstown House
– Abbeville
– Humewood
•
- Burlington
- Parknasilla
Allsop / Space – mattress money
NAMA
• Seems to have bedded down a lot of
issues
• Certain level of enforcement
• Sales in Ireland not at significant level
• Agreeing end game still a big issue
• McKillen & Daly challenges
• New panel for Insolvency
services
Borrower Resistance
• Increasing problems
• Borrowers using rental income for living expenses
• Legal issues with security, title, tenants etc.
• Lack of knowledge on key aspects such as
planning rights way
• No co-operation on tax history
• Hidden costs- NPPR, PRTB, household charges,
contributions etc
Retail Receiverships
• Supermarkets
• Convenience Stores
• Forecourts
•
•
•
•
Receiver takes possession
Installs operator
Makes arrangements with franchiser
Stabilise business- Sales, Suppliers, Employees,
Profit and Margin
• Package for sale or lease within 8 to 10 weeks
Examinership
• Creditors petition for Examinership
• Cappoquinn Chickens / Henry Good Petition
(Golden Discs- Sony)
• S.9 Removes executive authority
• Allows gap period for Independent
Accountants Report
• Still need proof of Insolvency
• Success of Eircom and Atlantic Homecare
• Fewer failures
Personal Insolvency Bill
• Personal Insolvency Arrangements
(P.I.A.’s)
• < €3m – 65% vote needed
• > €3m – need consent of all secured
creditors
• ECB looking to lower threshold to €1m
• UK Bankruptcy – still available
Other Issues
• Licensing of Insolvency Practitioners – CAI
• Diploma in Insolvency – CAI
Outlook For Next 12 Months
• Waiting game on Insolvency Bill
• Bank inaction pushing strategic default
• Lack of finance and refinance options
• Loan book sales to continue
• Distress moving from property to trading
• Main activity in Bite Size Deals and Allsop / Space
Auctions
• Insolvency levels to stay flat