AIB granted conditional order on Tony O’Reilly shares

AIB has obtained a conditional court order giving the bank a charge over €2.7 million worth of shares held by, or on behalf of, businessman Sir Anthony O'Reilly in the Dromoland Castle holding company.

The order is aimed at giving the bank priority over Mr O’Reilly’s other creditors in relation to the shares, as part of AIB’s continuing efforts to recover a €22.6 million judgment entered against the businessman last June.

Inclusive of interest, and following the sale of certain assets, his total indebtedness to AIB stands at €15.2 million.

Mr Justice Brian McGovern granted AIB the order following an ex parte application by its lawyers in the Commercial Court today.

The judge said the bank could notify Dromoland Castle Holdings Ltd (DCHL), of Newmarket-on-Fergus, Co Clare, that the order had been made, as well as informing Wall Street investment institution BNY Mellon National Association, to which the shares are secured.

The judge made the case returnable to next week.

In an affidavit, AIB manager Bernard Carroll said Mr O'Reilly, who has a home in the Bahamas, told the bank on April 20th of a proposal to enter a "composition with his creditors under Bahamian law".

Mr Carroll said that Mr O’Reilly provided a statement of his assets and liabilities, saying that 8,216 shares in DCHL were secured to BNY Mellon and were valued at €2.74 million, based on an indicative offer.

The statement said Mr O’Reilly’s debt to BNY Mellon stood at about €6.2 million. AIB said it had no knowledge of BNY Mellon’s security interest in the DCHL shares, Mr Carroll said.

BNY Mellon holds a second ranking mortgage over Mr O’Reilly’s Bahamian home, “Lissadell”, in Lyford Cay. The net value of Lissadell is about €18.5 million and Mr Carroll said it appears there exists sufficient equity from the sale of the property for BNY Mellon to be fully repaid.

There was also sufficient equity for the full repayment of €7.4 million to EFG Bank and Trust (Bahamas) Ltd, which has a first ranking charge over the property.

If BNY Mellon looked to the Bahamian property, along with a €227,000 investment fund to which it has recourse, it would not need to rely on its security interest in the DCHL shares, Mr Carroll said.

AIB objections

AIB has made objections concerning the jurisdiction and procedure used by Mr O’Reilly to commence a composition with creditors under Bahamian law.

Mr Carroll said that AIB believed the proposed composition was “procedurally flawed” under Bahamian law, as Mr O’Reilly failed to petition the Bahamian courts in advance of holding a creditors’ meeting in London on April 30th.

AIB attended that meeting, chaired by Mr O’Reilly’s representative Bernard Somers, which was not attended by the businessman himself as he was under doctor’s orders not to travel.

Mr Carroll said AIB voted against the proposed composition, which was passed by a majority of creditors.

A further meeting is scheduled for London on May 14th, at which it was intended to register last month’s creditors’ meeting resolutions and confirm the composition with creditors by trust deed.

Mr Carroll said it appears from the minutes of the April meeting that Mr O’Reilly’s assets would be protected from creditors after registration of the resolutions in the Bahamas.

As AIB maintains the composition with creditors is procedurally flawed, the bank remains free to execute against any of Mr O’Reilly’s assets, and it is doubtful if any execution could be overturned in a subsequent validly convened composition, Mr Carroll said.

Even if the Bahamian procedure has been validly invoked, the composition only takes effect on registration in the Bahamas of last month’s resolutions, he added.