Barry Cowen (Offaly, Fianna Fail)
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246. To ask the Minister for Finance the total sum which NAMA has allowed developers retain once stretch targets have been received. [27160/17]

Barry Cowen (Offaly, Fianna Fail)
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247. To ask the Minister for Finance the number of times developers have been allowed to retain upside profits once stretch targets have been achieved. [27161/17]

Barry Cowen (Offaly, Fianna Fail)
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248. To ask the Minister for Finance the amount each developer has individually been allowed to keep once stretch targets have been achieved. [27162/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 246 to 248, inclusive, together.

The Deputy will be aware that NAMA is required, under Section 10 of the NAMA Act 2009, to obtain the best financial return from its acquired loans. Among the measures adopted to achieve this statutory objective, NAMA enters into arrangements with some co-operative debtors which involve measures to motivate debtors to maximise the return to NAMA from the workout of the assets controlled by these debtors. NAMA must operate as a commercial entity and I am advised that, in the absence of arrangements with debtors, the return achieved on the assets securing NAMA loans would fall short of the best achievable financial return required under Section 10.

Under arrangements agreed with debtors, the concessions granted to NAMA by debtors include charges over unencumbered assets, improvement in NAMA’s legal priority over charged assets, the perfection of legal security deficiencies by the debtor, cooperation with professional practitioners and the completion of development projects aimed at enhancing debt recovery. It is a matter of public record that, as part of the loan acquisition process, NAMA encountered difficulties with some of the legal documentation received from the participating institutions, including items of security not actually taken, guarantees not confirmed on the granting of new facilities and development loans with no security over work-in-progress or step-in rights. Other issues included defective land registry dealings and missing original documents (such as title). In many cases, the co-operation of debtors was required to ensure remediation of these issues.

In certain cases, a full or partial restructure of a debtor’s debts will involve the extension of new facilities to replace the facilities originally advanced by participating institutions, thus allowing the debtor more time to enhance assets and improve the overall return for NAMA.

Among the arrangements agreed with debtors in return for concessions which improve NAMA’s return are compromises of personal guarantees, debt compromise, potential profit share arrangements and debt restructuring. These vary according to the particular circumstances of each debtor connection and are conditional on the achievement of agreed milestones and on meeting stretch targets. In such cases, the debtor may share a small proportion of surplus proceeds. Such arrangements are particularly appropriate and necessary where facilities are non-recourse or where there is limited recourse. I am advised by NAMA that such arrangements have been agreed with 34 debtor connections to date. It should be remembered that NAMA acquired the loans of almost 800 debtor connections and 5,000 borrowing entities from the participating institutions. I am further advised that NAMA remains in ongoing negotiation with at least 20 other debtor connections in relation to prospective arrangements, debtor concessions and the requisite cooperation which would enable NAMA to maximise debt recovery. It is not certain that agreement will be reached in all of these negotiations.

The fundamental principle underlying any arrangement is that NAMA’s return under the arrangement exceeds the return that would apply in the absence of the arrangement. I am advised that the adoption of agreed arrangements with debtors has been an important mechanism to enable NAMA to ensure ongoing debtor co-operation in cases where otherwise debtors would refuse to cooperate and would opt instead for an insolvency process which would ultimately yield a lower net return to NAMA, particularly when enforcement costs are taken into account. NAMA advise that many debtors would not have maintained their co-operation unless they had clarity as to the long-term benefit to them of that co-operation.

I am advised by NAMA that the information sought by the Deputy in Questions 27160/17 and 27162/17 is confidential and that disclosure of this information would compromise NAMA’s negotiating position and thereby place it at a commercial disadvantage in its ongoing negotiations with debtors. This would ultimately be to the detriment of the financial return that NAMA could generate from the acquired loan portfolio. Under Section 202 (1) (d) of the NAMA Act 2009, ‘confidential information’ is defined as including ‘information the disclosure of which would tend to place NAMA, a NAMA group entity or the NTMA at a commercial disadvantage’.