Nama admits it may waive developers' debt if they have 'worked in good faith'

Nama admits it may waive developers' debt if they have 'worked in good faith'

Neil Callanan

-->

Nama chairman Frank Daly: moves to split developers' loans into two categories will lead to debt forgiveness and will prove controversial

Nama will allow developers who have repaid a certain amount of their debt to walk away from their obligations, a move that is likely to be very controversial.

Nama is to set up two loan classifications for developers, a spokesman confirmed following queries from the Sunday Tribune. The first will comprise the amount that Nama estimates the assets are likely to realise over the life of the business plan, known as Class A loans, plus a profit margin. Class B loans will comprise the difference between the Class A loan amount and the nominal value of the loans at the time of the restructuring.

Although the borrower will remain liable for the Class B loan, if they have sold all their company and personal assets and exhausted all means of repaying those loans, then Nama will discuss options with them for the category B loans, including releasing them from liability from their repayment.

"If they've exhausted all options, worked in good faith, reversed any asset transfers and demonstrated there is nothing left to sell, we will look at an agreement with them," a source said. "It's a choice of chasing them into penury or acknowledging what they've done."

However, the source stated that if the property market recovers, any surplus from category A loans will be offset against category B loans. Developers who fail to make their category A payments will still be bankrupted by Nama.

"Debtors will continue to be liable for the repayment of the full amount of their loans which were acquired by Nama and it will strive to make sure they repay the full amounts wherever feasible," the spokesman said.

Last year Nama approved the sale of close to €2bn in property assets held by borrowers in order to pay down debts either to the agency itself or to banks. Of that, €1.5bn has already been sold, 90% of it Britain. The figures include €1.3bn of property sales agreed prior to the acquisition of the loans by Nama, all of which was completed, with the sale proceeds reverting to the Irish banks. About €200m of the €700m in property sales approved after Nama acquired the loans has already been completed.

January 9, 2011

via tribune.ie

Posted via email from quirkeproperty's posterous