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GE & Pepper

Another way of asking the same questions

I am also looking into the extent of Pepper being the beneficiary of our GE Woodchester facility and at the moment it looks like Pepper are no more than holder in due course, please clarify.

(1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions; namely,

(a) That he became the holder of it before it was overdue, and without notice that it had been previously dishonoured, if such was the fact:

(b) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it.

(2) In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.

(3) A holder (whether for value or not), who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.

Moving on and our ‘contract’, which as stated previously, we never agreed to or was even asked to, a contract is usually described as an agreement between two parties, whether corporate entities or individuals. The agreement is legally enforceable if it is based on genuine consent and involves an exchange of economic value, usually called consideration

In essence, privity means that only the parties to a contract – those, privy to it – have enforceable rights and obligations under that contract.

The privity rule means that only the parties to a contract (those privy to it) have enforceable rights and obligations under the contract.

A third party does not have enforceable rights or obligations under the contract.

First, only a party to a contract can have any burdens from the contract enforced on them. Only a party to a contract can enforce the contract or a term of the contract. A third party cannot sue to enforce the contract, even if the contract was intentionally made for their benefit.

It is not possible to assign a contractual obligation, as opposed to a benefit, to a third party without the consent of all parties involved. In reality in this situation the third party is a party to a new agreement.

Negotiable Instruments

1.51 Cheques, bills of exchange and promissory notes are examples of negotiable instruments. Cheques and bills of exchange order the payment of

money, whereas promissory notes contain a promise to pay money.

1.52 Ownership of the rights contained in the instrument can be transferred to and enforced by a third party, referred to as the .holder in due course..63 Section 38(2) of the Bills of Exchange Act 1882 provides that the holder in due course may take an action against not only the original debtor on the instrument if he fails to pay, but also against any other previous signatories of the instrument who have had the debt negotiated to them. This makes negotiable instruments an important exception to the privity of contract rule.

The privity rule can thwart the intentions of the contracting parties.1 As the law currently stands, a third party cannot enforce a contract made for their benefit, even if the contracting parties agreed that they should be able to do so. “the principle that parties are free to enter into whatever kind of contract they like, provided the contract was freely and voluntarily entered into”.

When the contract expressly states that the third party has a right to enforce a term of the contract 3.11 The Commission is of the view that a third party should also be able to enforce a term of a contract when the contract expressly states that the third party has a right of enforcement, whether or not the contract benefits the third party. This means that if the contracting parties intend to give a right of enforcement to a third party, and expressly provide for it in the contract, the courts can give effect to that intention.

The requirement of consideration 3.25 as a general rule, a contract is enforceable if the contracting parties have each promised something or done something in return for the promise of the other. It is said that each party must provide .consideration. for the promise of the other. One reason traditionally given to support the privity rule was that the third party should not be able to enforce a contract because they have not provided any consideration under that contract.

Unfair contract terms: An unfair contract term is not binding on the consumer, although the contract itself will, if possible, continue to bind the parties

Since the Pontiff’s apostolic letter of July 2013 and the contents therein, I would remind you all that, Culpa lata aequiparatur dolo, “a concealed fault is equal to a deceit”, likewise, Fraus est celare fraudem, “it is a fraud to conceal a fraud”. The papul decree of July states that no person can hide behind the statement “I was only doing my job”, everyone has become accountable by decree. I would advice you to seek legal advice before ignoring this point.


One final question, has GE Woodchester Home Loans Ltd (your previous company name. The company was only structured under a name change) or Pepper:- assigned, transferred, securitised, hypothecated or sub-participate the benefits and or obligations of all or any part of our facility to any other entity


Contract, what contract

It also seems that it is not possible to assign a contractual obligation, as opposed to a benefit, to a third party without the consent of all parties involved.


As the law currently stands, a third party cannot enforce a contract made for their benefit, even if the contracting parties agreed that they should be able to do so. “the principle that parties are free to enter into whatever kind of contract they like, provided the contract was freely and voluntarily entered into”.

GE Money and Securitisation:


Off-Balance Sheet Arrangements:

Our securitization activity is primarily transacted through special purpose vehicles funded in the asset-backed commercial paper and term bond markets. The assets that we securitize include receivables secured by equipment, commercial and residential real estate, credit card receivables, trade receivables and other assets originated and underwritten by us in the normal course of business.

At December 31, 2007, off-balance sheet securitization entities held $55.1 billion in financial assets, up $9.0 billion during the year. Assets held by these entities are underwritten based on the same criteria as our on-book assets.

We monitor the underlying credit quality in accordance with our servicing role and apply rigorous controls to the execution of securitization. Based on our experience, we believe that, under any plausible future economic scenario, the likelihood is remote that the financial support arrangement we provide to securitization entities could have a material adverse effect on our financial position or results of operations.

Investors in these entities usually have recourse to the underlying assets. In addition, we provide credit enhancements, most often by retaining a subordinated interest; the carrying value of our retained interests was $5.8 billion at December 31, 2007, up $1.1 billion during the year. We recognised impairment losses on retained interests of $0.1 billion in 2007, primarily at Commercial Finance.

Impairment losses on retained interests in 2006 were insignificant. Investments in retained interests at GE Money also decreased by $0.1 billion during 2007, reflecting declines in fair value accounted for in accordance with a new accounting standard that became effective at the beginning of 2007. We have also entered into other various credit enhancement positions with these securitization entities, including liquidity and credit support agreements and guarantee and reimbursement contracts, and have provided our best estimate of the fair value of estimated losses on such positions. The estimate of fair value is based on prevailing market conditions at December 31, 2007. Should market conditions deteriorate, actual losses could be higher. Our exposure to loss under such agreements was limited to $2.8 billion at December 31, 2007.

Debt Instruments, Guarantees and Covenants

The major debt rating agencies routinely evaluate the debt of GE, GECS and GE Capital, the major borrowing affiliate of GECS.

These agencies have given the highest debt ratings to GE and GE Capital (long-term rating AAA/Aaa; short-term rating A–1+/P–1).

One of our strategic objectives is to maintain these ratings, as they serve to lower our cost of funds and to facilitate our access to a variety of lenders. We manage our businesses in a fashion that is consistent with maintaining these ratings.

GE, GECS and GE Capital have distinct business characteristics that the major debt rating agencies evaluate both quantitatively and qualitatively.

Why not ask:


I am still looking for answers; to what extent is Pepper the beneficiary of our GE Woodchester facility and at the moment it looks like Pepper are no more than holders in due course and little more than 3rd party interlopers, please clarify.

Back to privity, in essence, privity means that only the parties to a contract – those, privy to it – have enforceable rights and obligations under that contract, would you like to comment?

It also seems that it is not possible to assign a contractual obligation, as opposed to a benefit, to a third party without the consent of all parties involved. In reality in this situation the third party is a party to a new agreement.

I notice that Pepper repeatedly claim “the Borrower is in default.” Although this claim may be true, it is completely irrelevant. What is relevant is whether or not the ‘purported loan’ is in default. So my question to Pepper, having bought the loan for €0.16 in the euro, is the loan in default, is the borrower (us) in default, is the loan performing?

I understand that in almost all cases the ‘loan’ is not in default as it has been paid in full by some entity, at present, unknown to me.

In the litigation case you intend to bring, you will guide the case towards a discussion concerning our failure to pay when in fact the real question is whether or not the Note has been paid – in law it does not matter who paid the note, just whether or not its been paid. So I will ask you to make enquiries to your Company; Pepper, its agents or servants as to whether they have any knowledge of the fact that Pepper or GE Woodchester Home Loans Limited had / has assigned, transferred, securitized, hypothecated or sub-participate the benefits and or obligations of all or any part of our facilities to any other entity

Please note that your claim against us will be based on the false premise, ‘that the Loan is in default because the borrower is in default’, notwithstanding the contents of the above mentioned; Privity of Contract, Holders in Due Course, the loan being in default and the borrower being in default, every Judge knows that one has nothing to do with the other. Our stand will be bringing this to the forefront of any defence and the moment you instigate proceedings we will seek, further and better particulars and then discovery.

In our pending case, it simply does not matter how the Note was paid, nor does it matter if the Borrower is delinquent – the only thing that matters is whether or not the note was paid for, are you satisfied that the loan you bought from GE Woodchester Home Loans Ltd, was paid in full by an entity as yet unknown to me.

Our argument will be about whether or not the Note (digital or otherwise) is in default it is not an argument the Pepper or GE Woodchester can win. For the Note to be in default would require a complete absence of: 1) any payment from insurances, 2) the standard language in the PSA; and 3) the Bank securitising the note. Plus, GE Woodchester and the insurance companies Revenue filings would then have to be fraudulent.

We will have you go on record to claim the Note (digital or otherwise) was not paid in full and/or in part by any entity and we will invite your company to supply the corresponding Revenue and S.E.C. records establishing such, by way of using the courts own mandate.

I would remind Pepper that the law is very clear concerning what must happen with a Note in the case of a foreclosure – the Note must be returned to the borrower and/or cancelled by the court. I know, like Pepper and so does the court that this NEVER happens because the Note was destroyed shortly after it was signed and a ‘digital version’ was created.

It is also noted that from an extended search of the companies registration that GE Woodchester Home Loans Ltd did a name change for the ease of the up and coming litigation, however it is quite obvious that GE sold the loan books to Pepper and Pepper is a different entity.

GE losses


GE Capital Woodchester, recorded pre-tax losses in its Irish business totaling €107.1m in 2011.

Accounts filed with the Companies Office show GE Capital Woodchester Home Loans Ltd sustained the loss after incurring exceptional costs of €92.9m through the writing off of bad and doubtful debts.

The loss in 2011 follows losses of €71.9m in 2010.

The figures show that the firm had repossessed properties totaling €4.5m on its books in 2011.

A note attached to the accounts, states that “properties were repossessed in 2008, 2009, 2010, and 2011 as a result of a failure by certain customers to meet their contractual monthly mortgage repayments.”

The figures show that the firm had €466m in loans to customers at the start of 2011 prior to the bad debt provision. In the three years prior to 2011, GE Capital Woodchester wrote off €84m in bad debts.

Pepper Home Loans Group, purchased GE Capital Woodchester Home Loans for a total of €149m.

According to the directors’ report, the provision of bad debts of €93m increases the bad debt provision coverage on the loan book to 26% compared to 15% in the prior year.

The director’s state: “Facing a challenging economic environment, the company will continue to manage its loan book to minimise losses.

The figures show that in 2011, the firm received €10.3m in interest income and paid out €12.6m in interest, resulting in a gross loss of €2.3m.

The firm also incurred the €92.9m bad debt provision and an additional €11.7m in administrative expenses.

The firm’s accumulated losses and shareholders’ deficit stood at €223.1m at the end of Dec 2011.

In a post-balance sheet event, the accounts disclose that the firm’s loans, with a carrying value of €424.6m, were forgiven, resulting in the recognition of a capital contribution.

The firm also repaid loans from related parties totaling €56.6m.

The note attached to the accounts states: “As a result of these post year-end transactions, the company has returned to a net asset position.”