PG Tips

Posted by Mark on 5th Oct 2009
It would appear that Anglo Irish are to start calling in Personal Guarantees (http://www.propertyweek.com/story.asp?sectioncode=297&storycode=3150227&c=1), which given that the majority of their lending was PG backed could lead to some very high profile casualties. 

Already there has been a suggestion that the Modus boys are guilty of no more than not being Irish, but given how deeply unpopular bankers/developers and Nama is in Ireland, I can see far more borrowers being personally pursued; being high profile in Ireland is likely to be more of a hindrance.

When we have discussed enforcement of PG's with out banking partners, the majority view is that they are only to "keep borrowers honest" and almost no one would consider going after some-one's house, unless the borrower had bee particularly obstructive or even fraudulent.

Clearly if you have a PG liability, ditch the Bentley, the football club and talk of setting up a phoenix company to buy back your assets assets on the cheap.

The current market is causing a lot of distress to many, many people that Morgan and I know well and the thought of a bank coming after you personally must be pretty grim.  However, these agreements were openly and fairly entered into, even requiring an affidavit from a lawyer to certify that you had been properly advised of the consequences.  I certainly didn't have the necessary "kahunas" to risk the ansectoral family home in the pursuit of yet another deal and walked away from a large portfolio transaction when Anglo asked fro a PG "at final board".

Whilst you might have admired swashbuckling investor/developers who chased the dream and lived the high life without a thought to the potential consequences, you shouldn't feel sorry for them, they knew or ignored the risks. 

There are millions of others who will probably lose far more of their net worth through no fault of their own, graduate surveyors, shop workers and as we go forward even teachers and nurses, as a direct result of the property mania up to 2007 who have probably never even been to Langans.

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