Question re: bankrupt developers. Were they really broke?

NIMAN

I do wonder how bust they really were?
Funny how quite a few of them are back in business, with a huge number of unpaid debts behind them.

I see one local set of brothers up here in the nw, who are building hundreds of houses again. And they had gone to the wall.

So when these folk go bust, do they really or have they millions stashed away?

dubrov

They went broke but their wives were still loaded

feargale

Did you see any of them sitting on O'Connell Bridge holding out a hat?

Victor

NIMAN wrote: »

I do wonder how bust they really were?

Many were in the position where they owed lots of money, owned lots of land, but as there was no demand for houses, the land only had agricultural value. There was a case, I think in Naas, where a farmer sold land to a developer for €20m and bought it back for less than €1m.

I see one local set of brothers up here in the nw, who are building hundreds if houses again. And they had gone to the wall.

Their company or them?

There is a saying in the drugs trade "don't use your own product". The problem is that many competent house builders also got into land speculation.

listermint

Victor wrote: »

Many were in the position where they owed lots of money, owned lots of land, but as there was no demand for houses, the land only had agricultural value. There was a case, I think in Naas, where a farmer sold land to a developer for €20m and bought it back for less than €1m.

Their company or them?

There is a saying in the drugs trade "don't use your own product". The problem is that many competent house builders also got into land speculation.

Not sure what any of that has to do with this. If you had land and went bust the land went to Nama or the banks.


Quite simply these lads played the poor mouth but syphoned off money all over the place . Abroad, their kids , their wives and so forth.

Creative accounting, and these lads are back with a bang smiling in the faces of contractors they put out of business when they bump into them around town

Conservatory

If the cartel kills everyone that owes them money they will never get the money back.

These people create employment at the end of the day. If your finances are in order bid against them then get planning then build some houses. If you can do it without going bust in the next crash you will probably be one of the only established crowds in town when the next boom happens.

Or you could, ye know, complain about it.

listermint

Conservatory wrote: »

If the cartel kills everyone that owes them money they will never get the money back.

These people create employment at the end of the day. If your finances are in order bid against them then get planning then build some houses. If you can do it without going bust in the next crash you will probably be one of the only established crowds in town when the next boom happens.

Or you could, ye know, complain about it.

I don't think that's the point. If the average Joe went bust on his mortgage or debts that would be it. No ability to Syphon money anywhere.

There is truth in the old adage the more you owe the less you owe.

JeffKenna

Nope...they turned their accounts into crap in order to hide/make things difficult for auditors. By this I mean moving them to Excel files in order to create confusion and throw their assets around right, left and centre.

NIMAN

listermint wrote: »

I don't think that's the point. If the average Joe went bust on his mortgage or debts that would be it. No ability to Syphon money anywhere.

There is truth in the old adage the more you owe the less you owe.

Thank you for understanding what I was trying to say. I wasn't saying I should be building houses.

My point is, these guys claimed they were broke. Penniless. Yet how does a businessman who had no money now find themselves building hundreds of houses again?

Surely there has to be someone in government circles who needs to ask these guys where they got the money to start buying land again and start building? If they had money hidden away, surely that fraud?

Heebie

I think they just moved tons of cash "offshore." but... of course, on paper... of course they went broke.

NIMAN

Heebie wrote: »

I think they just moved tons of cash "offshore." but... of course, on paper... of course they went broke.

Then how come no-one in a position of authority, or even a good investigative journo, isnt saying " hey hold on a minute fellas, where'd you get all that money".

utmbuilder

Made everyone better at hiding assets for next time around

Conservatory

listermint wrote: »

I don't think that's the point. If the average Joe went bust on his mortgage or debts that would be it. No ability to Syphon money anywhere.

There is truth in the old adage the more you owe the less you owe.

Bankruptcy laws don’t work like average joe laws.
Also if you stopped paying the mortgage you’d probably still be in the house in 8 years.

Lumen

Conservatory wrote: »

These people create employment at the end of the day.

Demand creates employment.

davo10

This has nothing to do with them siphoning or hiding money, it is about their knowledge and expertise in large scale house building. Most developers who went bankrupt lost pretty much everything they could legally lose, that is what bankruptcy means. Most went to the UK and discharged their bankruptcy there in a process which is much shorter than here.

There was an article in the Business Post about this very point a couple of weeks ago, the reason many big developers are back in business is because the banks need them and society needs them, there is big demand for houses, development land is there,, they know how to build on a huge scale so the banks/VC companies are willing to loan them the finance. Also, the lenders are pretty certain to make money in this market so it makes business sense.

lawred2

NIMAN wrote: »

I do wonder how bust they really were?
Funny how quite a few of them are back in business, with a huge number of unpaid debts behind them.

I see one local set of brothers up here in the nw, who are building hundreds of houses again. And they had gone to the wall.

So when these folk go bust, do they really or have they millions stashed away?

Surely it was more in the main cases of limited companies bring liquidated than lads' own wealth being exposed..

I'm sure the latter happened too.. to the more greedy of them.

Wanderer78

Has bailing out bankrupt banks actually worked?

Lumen

davo10 wrote: »

Most developers who went bankrupt lost pretty much everything they could legally lose

But many put assets beyond reach of creditors, through transfers to family members.

Are you denying that this happened?

davo10

Lumen wrote: »

But many put assets beyond reach of creditors, through transfers to family members.

Are you denying that this happened?

Am I on trial? Does it matter if I agree or deny it?

The fact is they are back in business because they have the knowhow to develop large scale projects and as a result of that, they have access to finance again. Without big developers, all these houses we need would never be built.

Lumen

davo10 wrote: »

Am I on trial? Does it matter if I agree or deny it.

No. Yes. It's a reasonable question.

Caliden

Go up and have a drive by of Sean Quinn's house and you'll find your answer.

It's bigger than the hotel it's built beside and yet the lad was 'broke'

Diarmuid

Surely most of these guys would have run their development companies as ltd companies?

Lumen

Diarmuid wrote: »

Surely most of these guys would have run their development companies as ltd companies?

Yes, but the limited liability was typically counteracted by personal guarantees required by the banks.

Some developers managed to win the staring contest with the banks and get loans secured on the assets, but those were exceptions rather than the norm.

Berserker

Their businesses went bust but they didn't. I know a family who are in the business who went bust (Ltd company) during the recession. They just set up a new business with the daughters and sons as owners. The father was the owner of the business that went bust, so he took a minor role in the new business, on paper.

Lumen

Berserker wrote: »

Their businesses went bust but they didn't. I know a family who are in the business who went bust (Ltd company) during the recession. They just set up a new business with the daughters and sons as owners. The father was the owner of the business that went bust, so he took a minor role in the new business, on paper.

It's not exactly that simple.

It's normal for property developers to set up multiple small limited companies, possibly one for each development. I assume this makes it easier to administer and secure loans on the assets under development.

In addition, there may be personal guarantees on some or all of the loans.

So the normal situation is that the ltd company goes bust, the subcontractors join the queue of creditors (i.e. get nothing), the banks go after the directors for any personal guarantees, the directors then either reach an accommodation with the banks (e.g. by threatening bankruptcy) or declare personal bankruptcy to rid themselves of all liabilities and start again.

There's nothing in principle wrong with using ltd company structures to shield directors/shareholders from risk, that's the whole point of limited companies. The practical issue, as I understand it, is that many developers created such a web of cross-liabilities between different companies, their own family members, and banks, that untangling the mess was near impossible, and the banks were too stupid or lazy during the boom to stop this from happening.

Also, joint and several liability of spouses seems to have not really worked out that way.

There was a nice house I was looking at in a posher part of north Dublin in about 2014ish that was owned by a property developer. It was taken off the market, the EA said the creditors couldn't figure out how to untangle it. A couple of years on there were brand new luxury cars parked outside.

jimmycrackcorm

Lumen wrote:

But many put assets beyond reach of creditors, through transfers to family members

Are you denying that this happened?

Do you have definitive proof of this or is it speculation? I know of one developer whose company went bust but he still had some assets that weren't used to guarantee the development loans.

Lumen

jimmycrackcorm wrote: »

Do you have definitive proof of this or is it speculation? I know of one developer whose company went bust but he still had some assets that weren't used to guarantee the development loans.

What's the burden of proof in a discussion forum?

It has been widely reported. I found this in about 5 seconds...

Property wives: who owns what?
https://www.irishtimes.com/news/property-wives-who-owns-what-1.614524

mariaalice

The Billionaire long established construction firm didn't exactly go bankrupt in most cases, Sean Dunne's and the like paid a price, however, a lot small to medium sized builder developers did go absolutely genuinely bankrupt they were caught out by the market.

CrankyHaus

Clearly it's a rigged game.
If the taxpayer took on the debts then the fullest recovery possible should be sought.
If recovery was frustrated by legal loopholes then the government should pass legislation to close the loopholes.
The fact that this isn't even on the agenda tells you everything you need to know.

If these guys are the geniuses that we desperately need to build houses then the taxpayer wouldn't have had to take on their debts in the first place after they helped tank the economy.

mariaalice

Lumen wrote: »

What's the burden of proof in a discussion forum?

It has been widely reported. I found this in about 5 seconds...

Property wives: who owns what?
https://www.irishtimes.com/news/property-wives-who-owns-what-1.614524

That article is from 7 years ago, its an interesting moral argument does being married to someone mean you are responsible for their debts.

mariaalice

https://www.independent.ie/business/commercial-property/the-boys-are-back-in-town-the-oldschool-developers-making-a-comeback-36348525.html.

Should they have all been barred from every involvement in property development forever?