In recent years, the sale of non-performing loan portfolios by banks and other credit institutions to investment funds has become more prevalent. Consequentially, such funds feature regularly in Court lists, either as plaintiffs seeking to enforce their acquired rights under the loan facilities or as defendants in proceedings brought by borrower litigants seeking to challenge those rights. Inevitably, the transactional documents which give effect to the loan transfer (often a Loan Sale Deed and Deed of Transfer) are exhibited and/or discovered in such proceedings and are usually subject to prior extensive redaction (save for the relevant clauses which give effect to the transfer and the schedule showing the relevant loan account(s)), on the basis that the redacted clauses are confidential, commercially sensitive, irrelevant to the matters in dispute and/or contain information concerning third parties unrelated to the proceedings.
One of the issues which arises frequently in such proceedings, and is often the subject of much contention, is the entitlement of the borrower litigant to inspect and/or obtain copies of the relevant documents in unredacted form, which would ultimately reveal the price paid by the investment fund for the loan(s) the subject of the proceedings and related security. Understandably, this raises concerns for investment funds in protecting their commercial position in respect of future loan acquisitions. Two recent decisions of the High Court in Courtney v OCM Emru Debtco DAC & Anor1 and Promontoria (Aran) Limited -v- Andrew Sheehy2 provide a welcome guidance to investments funds and their legal advisors on the special circumstances in which a loan purchase price would need to be disclosed.
Courtney v OCM Emru Debtco DAC & Anor
The background to this case involved plenary proceedings instituted by Eileen Courtney (Mrs. Courtney) against OCM Emru Debtco DAC (OCM) and David O'Connor (the Receiver) whereby Mrs. Courtney challenged, inter alia, the validity of the assignment of her loans (originally advanced to her and her late husband by Anglo Irish Bank Corporation plc) from NALM (a subsidiary of NAMA) to OCM. Prior to the completion of the loan sale, Mrs. Courtney made an offer to purchase her loans from NALM in order to prevent the sale, however this was declined. During the course of the proceedings, Mrs. Courtney brought an application under Order 31 Rule 15 RSC to inspect unredacted copies of the relevant...