LAW IN PRACTICE
Say hello and wave goodbye What issues arise in debt recovery in the wake of loan assignment?
The image portrayed by these commentators of the avaricious fund coming to enforce a debt may explain the frequency with which the assignment itself
Keith Rooney BL
becomes the focus of a debtor’s
defence.
This is particularly In the last number of years, there has been a marked increase in credit
so where the facts do
institutions selling loan portfolios to investment funds, sometimes colloquially
not
allow
for
a
substantive defence, and so technical
referred to as ‘vulture funds’. The right to legally assign a debt or
legal objections are all
chose-in-action is nothing new, having been recognised in statute for over
to consider what are the
required proofs an assignee must
140 years, reflecting the reality that they are assets capable of assignment
put before a court when
seeking to enforce acquired rights. Can
either for value or otherwise.1
those
However, when an assignee such as a fund seeks to exercise these newly
conclusion, can a challenge to a deed of assignment, even if successful,
acquired rights, they are often challenged in court as to their entitlement to
actually assist a borrower?
documents
be
that remain. To that end, it is necessary
redacted and, if so, to what extent? In
do so. This has inevitably led to a succession of attempted defences in debt claims focusing upon the assignment itself rather than any substantive issues
Proof of assignment – the statutory position
between the parties. It is important to remember, from the outset, that the
The starting point for any discussion on this topic must be the Supreme Court
assignment of a debt does not affect the rights of the debtor. They retain all
of Judicature (Ireland) Act, 1877 (“the 1877 Act”) and, in particular, s.28(6),
the legal and contractual rights they had prior to the assignment. It has become
which states:
a common refrain for certain commentators to assert that the assignment of a debt to a fund is inherently a negative outcome for the debtor. However, to
“Any absolute assignment, by writing under the hand of the assignor (not
date, there appears to be no evidence to substantiate that suggestion.
purporting to be by way of charge only), of any debt or other legal chose in
THE BAR REVIEW : Volume 24; Number 3 – June 2019
75