When a vulture fund buys a distressed loan book from an Irish bank, the process usually unfolds along the following steps: A so-called section 110 special-purpose vehicle (SPV) set up by the fund buys the debt portfolio for the agreed price; the SPV books the purchase value and immediately increases it on its balance sheet to reflect the profit it is forecasting to make by working through the loans; then it reports annual fair value adjustments to reflect actual debt collections, and returns ultimate profits to its overseas investors under the form of intercompany interest – tax-free unless the property…

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