Hickey pharmacy group drops IBRC action

An action by the

Hickey

pharmacy group and its owner

Patrick Hickey

aimed at preventing their loans valued at up to €45 million being included in a portfolio of €900 million loans offered for sale by the liquidators of

Irish Bank Resolution Corporation

has been withdrawn on confidential terms at the

High Court

.

The group had complained its own offer to buy the loans for €40 million had been rejected and the sale would be “disastrous” for the group and its 300 employees.

The importance of the action, which challenged the constitutionality of provisions of the IBRC Act and had implications for other parties who wish to prevent their loans being sold arising from the special liquidation of IBRC, was underlined by the fact there were six senior counsel in court yesterday when the case was due to open before Mr Justice Iarfhlaith O’Neill. There were also several junior counsel and solicitors in court.

Michael Cush SC and John Gleeson SC represented the Hickey side; Michael Collins SC and Cian Ferriter SC represented IBRC; and Michael McDowell SC and David Barniville SC represented the State.

After discussions between the parties, Mr Cush told the judge the case was being withdrawn and could be struck out with no order. His side was to make a contribution to the respondent's costs, counsel added. The judge said he was very pleased the parties had resolved a "very complex" case. It us understood that no commitment was given that Hickey could buy its loans.

Confidential
Patrick Hickey was in court but declined to comment, other than to say he was "happy", because the matter was confidential.

The special liquidators said in a statement released later that Hickey had withdrawn the proceedings and also withdrawn the application for a judicial review of the IBRC Act. “The remaining sales processes continue to progress according to the timetable previously set out by the special liquidators,” it said.

Business plan
The Hickey side had argued their loans are fully performing and the sale of them as part of a larger portfolio or their possible transfer to Nama would be "disastrous". Their concern was the loans may be sold to a person or entity such as a foreign private equity fund "not interested in maintaining a long-term banker/customer relationship" or, if the €900 million portfolio was not sold, all those loans would be moved into Nama to the detriment of the Hickey side and contrary to the group's business plan.

In an affidavit, Patrick Hickey said they had no information about the composition of the €900 million portfolio but media reports suggested the loans were being sold as part of "Project Evergreen" containing loans relating to trading Irish businesses, including a 50 per cent stake in Arnotts; the oil and service station firm Topaz; TV3: Fields Jewellers and Hickeys Pharmacies.

'Mixed bag'
It was unclear which of those loans comprised the portfolio with a par value of €900 million although media reports indicated some of those loans, but not those of Hickeys, would be sold separately, Mr Hickey said. It seemed certain the portfolio would be a "mixed bag" of loans of varying quality and value with the effect any purchaser was likely to try and realise "value" from the Hickeys loans. None of this was in the public interest, he said.

The action was by Hickey's Pharmacy Ltd, operating 26 pharmacies; Damus, a private unlimited company involved in the retail pharmacy business; and Patrick Hickey, a director of both companies and a beneficial owner of Damus.