Company that bought BOV loans starts biting

The private company that bought some 700 Non-Performing Loans (NPLs) last year from the Bank of Valletta has already launched some 25 different court cases against former BOV clients and companies that did not pay up their outstanding loans after several warnings.

In a clear warning to the estimated 700 creditors, who still must pay their dues, 35 14 Capital SCC Plc has already taken 25 of the NPL clients to court, asking for repayments or executive orders by the court to sequestrate their property and sell it through a court auction to recoup these debts.

An analysis of the ongoing court cases by The Shift shows that so far, the value of the ongoing court cases amounts to more than €5 million, apart from an interest rate of 8% on the outstanding debts.

In some cases, the court has already ordered the execution of the sale of property, which the debtors had used as collateral to acquire their original loans from BOV.

Financial services practitioners following the court cases told The Shift that 35 14 Capital is adopting an aggressive stance in dealing with the former BOV debtors, sending a message that it is serious about recouping the outstanding loans.

“There is nothing wrong in this as what BOV has done is all legitimate in banking practices. Although the value at which BOV has decided to sell its NPLs might be controversial and debatable, the company taking over is interested in recuperating its investment in the shortest possible time,” a senior financial services expert told The Shift.

BOV’s decision to sell some 700 non-performing loans to 35 14 Capital was made in late 2023 and revealed by The Shift a few weeks later.

While BOV never divulged details on how and which loans were sold and their original cumulative value, The Shift had revealed that these were sold for €26 million even though their estimated value may be over €100 million.

The bank had defended its decision to sell the NPL’s portfolio, claiming that the difficulty in recovering the loans made it advantageous to sell them off for a lump sum. The deal has improved the bank’s balance sheet.

As soon as the businessmen behind the company buying the loans were revealed, eyebrows were raised in the financial services industry.

35 14 Capital is a partnership directed by Jean Carl Farrugia, founding partner of DF Advocates and Christopher Vella, CEO at business consultancy Polymath & Boffin.

Farrugia and his partner at DF Advocates, Kevin Deguara, are currently facing criminal charges in connection with the scandalous hospital deal.

Suspicions increased when it was revealed that Deo Scerri, a former BOV Chairman and Labour Party auditor, acted as one of its advisers.

Scerri has always denied any conflict or influence in the company’s decision to acquire the loans. He terminated all his connections with 35 14 Capital earlier this year, citing retirement as the main reason.