Cerberus defends borrower treatment following lawsuits

Cerberus, the US investment house that has bought more than €10 billion of distressed property loans in this State and Northern Ireland, has defended its treatment of borrowers after it emerged the company has become embroiled in a large number of lawsuits on both sides of the Border.

The company, which last year bought the £4.5 billion Project Eagle tranche of northern loans from Nama, is facing a series of court challenges from some of the portfolio’s most high-profile borrowers.

It is facing a court showdown in Belfast in September with Down developer John Miskelly, who gained public attention during the boom when he attempted to put together a consortium to buy Liverpool football club.

Promontoria Eagle

Mr Miskelly, who could not be reached for comment, has taken a lawsuit against Promontoria Eagle, the Cerberus entity that bought Project Eagle. He wants the courts to force it to set aside its demands against him, according to court records. Mr Miskelly’s wife has also launched a similar suit.

Cerberus seized Mr Miskelly’s Ten Square hotel in Belfast in January. The following month it appointed receivers to a further six properties owned by his company, Applecroft Investments.

Applecroft owed more than £80 million to various lenders at the end of 2013, according to its latest filed accounts.

A company linked to Gareth Graham, another Northern Ireland developer, has also taken a lawsuit against Promontoria, with a hearing scheduled for the same day in September as the case taken by Mr Miskelly.

Mr Graham recently got clearance from the courts in the north to access £75,000 of his company’s cash to fund his legal fight.

In this State, Promontoria (Aran), which Cerberus used to buy £4.8 billion of loans from Ulster Bank, is also being sued by three developer brothers from Tipperary who object to the US fund taking over their loans. Ulster Bank is also named as a defendant in that case, which is not yet listed for hearing.

Earlier this month, Hugh McGinley, a Donegal developer, told the High Court he was “shocked” to learn on RTÉ that his loans had been sold as part of Project Eagle. Cerberus has appointed receivers to 57 apartments he owns in Dublin’s docklands.

Mr McGinley is defending a case brought by the receiver to restrain him from interfering with the process, while he has also launched a separate case against Nama and Promontoria Eagle.

The sale of Project Eagle is currently the subject of political controversy following a number of Dáil statements by Independent TD Mick Wallace.

Cerberus has also launched lawsuits against several borrowers as it appoints administrators and receivers and issues demands for payment. Court records in Northern Ireland show a series of such actions, including one against an Armagh developer who owns swathes of development land in the Border region.

Promontoria Eagle also recently filed injunction proceedings against a company controlled by a prominent family who own a large property in Co Cork.

‘Disquieting stories’

A banking report earlier this year by British MPs on the Northern Ireland affairs committee expressed concern about the way Cerberus had dealt with some borrowers, insisting the committee had heard some “disquieting stories”.

In a statement last night, Cerberus said 40 per cent of Project Eagle borrowers were already subject to enforcement proceedings by Nama before it bought the portfolio.

“Cerberus treats every borrower fairly and consistently,” it said. “Consensual resolutions account for the vast majority of our outcomes and are always our preferred route.”

The company said the feedback it had received from borrowers and tenants had been “overwhelmingly positive”.