Debtor Business Plans

Why is a business plan required?

NAMA’s objective is to obtain the best return for taxpayers. For each of its 850 debtors, it must decide whether its objective is best achieved through working with the debtor or enforcing against him. The decision to support a debtor or enforce against him is determined primarily by the content of the debtor’s business plan. The primary purpose of the plan is to present a comprehensive account of each debtor’s financial affairs and to set out how he proposes to maximise the value of his assets and to repay the amounts due to NAMA.

If NAMA considers that a debtor’s business plan represents a viable way forward, it will work with him to ensure repayment, to the greatest extent feasible, of the loans due. However, where a debtor cannot demonstrate viability or where he is unwilling to reach a reasonable accommodation with NAMA, the Agency will initiate enforcement action to take control of the assets underlying his loans.

Is there a template for the business plan?

There are two formats or versions of the NAMA Business plan.

  1. The first, which applies to the major debtors with complex corporate structures and whose loans transferred as part of the first three tranches, requires the provision of detailed and comprehensive information by the debtor to NAMA.
  2. The second, Business Plan Version 2, is a streamlined version of the original business plan and applies to the majority of debtors.  This is to be submitted either to NAMA directly (if the debtor is one of the largest 180 debtors whose loans are directly managed by NAMA) or otherwise to a participating institution in the case of the latter, debtors will submit their plans to the participating institution and based on the plans, the institutions will draft a strategy for submission to  NAMA.

The templates are not intended to be exhaustive and therefore debtors should include any other information which in their judgement, needs to be considered in order to adequately describe and elucidate their business, assets, liabilities, financial conditions and prospects.

Business plan documentation should be completed in upmost good faith with full disclosure of all facts, assumptions and issues likely to influence NAMA in reaching a decision on the appropiate course of action for a business, property, asset or loan facility.

Both version of the Debtor Business Plan can be accessed below.

What should a business plan include?

The key elements of a business plan acceptable to NAMA will include some or all of the following:

Debt repayment targets

Significant debt reduction must be achieved within three/four years. Targets typically involve a 25% debt reduction target by 2013 with a schedule of additional repayments at various stages over a period of up to eight years.

Personal guarantees

NAMA’s policy is to pursue all personal guarantees to the greatest extent feasible. 

Asset sales

The debt reduction targets will usually require a programme of significant asset sales by the debtor. The timing of any particular sale will depend on the type of property involved (residential investment, commercial investment, land, etc), the jurisdiction and location of the property and the scheduled expiry of any associated leases. 

Reversal of asset transfers 

NAMA insists, as part of a consensual agreement with a debtor, on the reversal of any the transfer of assets to third parties (spouses, other family members, etc.) over recent years. This can include property, cash, shares and other gifts. Debtors are required to produce sworn Net Worth statements and, where appropriate, NAMA will commission asset searches in order to verify information provided by debtors. 

Perfection of security

A debtor must commit to improve or perfect security where necessary.

Private Dwelling Houses (PDH)

The arrangement with a debtor may require him to dispose of an unencumbered PDH which is beyond his means. NAMA has a policy of taking a charge over unencumbered PDHs wherever it is legally feasible to do so. Part of the sales proceeds may be used to purchase a PDH more appropriate to the debtor’s current resources.  

Rental income

It is NAMA’s policy that rental income from investment assets controlled by the debtor be mandated to NAMA.

Unencumbered assets

NAMA’s policy is to acquire unencumbered assets as additional security, taking account of the cost of pursuance and the legal risks involved. In order to capture future upside potential, NAMA takes second charges over surplus equity where appropriate.

Non-property assets

Where there is surplus cash available, it is netted against a debtor’s loan obligations. Where appropriate, a debtor is required to sell shares, works of art and other non-property assets and apply such disposal proceeds against his NAMA debt.

Overheads

NAMA will stipulate management and staffing arrangements and other cost overheads. Among the issues considered are (a) the appropriate level of overhead given the complexity or otherwise of the debtor’s business, (b) which, if any, members of the current management team is likely to add value if retained and (c) whether the management team needs to be strengthened or enhanced.

Funding

In certain cases, NAMA provides working capital and development funding which enables viable projects to be brought to completion.

What specific documents must be completed for Business Plan version 2?

NAMA requests completion and submission of the following documentation:

A. NAMA Information Pack

This should include information about a debtor’s loan facilities, the assets securing these loans, any unencumbered assets and some general financial information.  A debtor is also asked to input the information into the NAMA Cashflow Model as outlined at B below. A soft copy version of the Information Pack should also be submitted on disk. However, if a debtor cannot input the information into the Cashflow Model for whatever reason, NAMA will accept the data provided and will arrange for the population of this data into the Cashflow Model. 

B. NAMA Cashflow Model

The debtor is required to input the data from their NAMA Information Pack into the NAMA Cashflow Model. Once populated, this model will create the tables and pie charts detailed in Section 1 (Executive Summary) of the Detailed Business Plan Document (see Section C below).

C. Business Plan Version 2 Template and Appendix

The Word template for this document can be downloaded from this site. Four hard copies and a soft copy of this document should be submitted by the debtor to NAMA.

Please find below the most recent versions of Business Plan Version Two to be completed. Should you have any difficulties downloading these documents please contact NAMA.

What specific documents must be completed for Business Plan Version 1?

Version 1 applies to the major debtors with complex corporate structures whose loans transferred as part of the first three tranches.  The documents below are available for download.

What happens after the business plan has been submitted?

Once the Debtor Business Plan has been submitted, it is reviewed by NAMA and its advisors.  The initial version of the plan will usually be the subject of additional discussion with debtors. A proposal will then be submitted to the NAMA Board or Credit Committee, as appropriate, for approval or rejection. If approved, the plan will thereafter form the basis for future funding and sales targets for the various assets.