Creditors chase business owners for €90m debts

By Laura Noonan
Irish Independent

Thursday November 12, 2009

STRUGGLING company directors, sole traders and business people have been personally hit with registered judgments of more than €90m in the first 10 months of the year, damaging their personal credit ratings and leaving them vulnerable to having assets repossessed.

The massive personal exposure of ordinary business owners to the financial collapse is revealed for the first time in new data compiled by debt monitor ‘Stubbs Gazette’ and the Irish Independent.

The €90m for the first 10 months of this year compares with €25.5m for the same period in 2008. The figures don’t include the €21.9m in judgments registered against builders and contractors in the first 10 months, or the €1.5m registered against those who gave "property developer" as their occupation.

The €90m also only covers registered judgments — an advanced stage of debt recovery where a judgment is actually registered in courts — and experts said those involved in business are likely to have been pursued for many more millions in unregistered judgments — a less advanced stage of debt recovery.

‘Stubbs Gazette’ boss James Treacy said the "vast majority" of the €90m was debt incurred for corporate activities, which was then pursued against company bosses who’d given personal guarantees or sole traders who did not have the benefit of limited liability.
"While the bankers are getting away scot-free and being rescued, this shows the harsh realities of entrepreneurship and business," said Mark Fielding, head of business lobby group ISME.

"The prevalence of personal guarantees means limited liability has gone right out the window." The €90m in debt was spread across 762 individuals, including 511 who gave their occupation as businessman, business- woman or business person, 151 listed as sole traders and 100 listed as company directors.

Debts under €10,000 accounted for 404 of the registered judgments, while another 209 were for debts of between €10,000 and €50,000, and 49 were for debts of between €50,000 and €100,000.

In the higher echelons, 71 people were pursued for debts of between €100,000 to €500,000 and 11 for between €500,000 and €1m.
Just 18 were pursued for over €1m, including one company director who was hit with a registered judgment of more than €8m. The bumper judgments against well-known businessmen, like hotelier Hugh O’Regan, are not included as they have not been registered.
"These debts do not go away," said Mr Fielding. "These are business people who’ve striven to do their best and employ people and now they could lose their house."

Stubbs’s Mr Treacy confirmed the registered judgments were "very serious" and could lead to creditors seeking judgment mortgages against personally held properties or going for an enforcement order and handing the case over to the sheriff.

Even without either of those actions, a registered judgment "affects a person’s credit rating and can make it very difficult to get anything from a credit union loan", he added.