Blackrock Clinic shareholders resist €2.4m application

Blackrock Clinic’s main shareholders are resisting an application for €2.4 million summary judgment orders to be entered against them at the Commercial Court.

Talos Capital Ltd has sued Joseph Sheehan and John Flynn over what its counsel Bernard Dunleavy SC described as "material" default.

Among Talos's claims is, when it paid out a €45 million loan on April 7th for purposes including to redeem some €24m in Irish Bank Resolution Corporation loans secured on shareholdings in the clinic held by Mr Sheehan and Dr George Duffy, Talos was not told Dr Duffy's loans had been redeemed three days days earlier.

That meant Talos was left without the security of the Duffy loans, Mr Dunleavy said. Mr Sheehan and JCS Investment Holdings XIV Ltd, a special purpose vehicle of his, were aware on April 7th the Duffy loans had been redeemed but had not told Talos, he said.As a result of the redemption of the Duffy loans, certain conditions precedent to any further drawdown of funds under the facility agreement became incapable of being satisfied by JCS, it claims.

The nub of Talos's complaint is it was not told, in advance of paying out the loan monies, Dr Duffy was "out", Mr Justice Sean Ryan observed.

Opposing summary judgment, Jarlath Ryan BL, for the defendants, disputed there had been any material default and argued that claim was based on Talos’s subjective interpretation of documents. The absence of Dr Duffy’s shares in the context of the financing does not affect the security or shares structure and is not a material adverse change, as the €45m loan was to purchase the debts secured by the shares, he said.

Mr Justice Ryan said he will rule before the end of November whether Talos is entitled to summary judgment or whether the matter should proceed to plenary hearing.

Talos, with registered offices in Dublin 2, says Mr Sheehan and Mr Flynn are US-based Irish citizens holding shares in Blackrock Hospital Ltd.

It claims Mr Sheehan's shares were charged to IBRC as security for his borrowings with that entity, formerly Anglo Irish Bank.

Before April 4th, 2014, IBRC also held charges over the shares of Dr Duffy as security for his borrowings while Mr Flynn, through his investment vehicle Benray Ltd, has shares in BHL charged to Nama as security for borrowings with IBRC, Talos claims.

Talos claims it agreed to lend €45m to Mr Sheehan and Mr Flynn, or companies controlled by them, to buy the IBRC loans of Mr Sheehan and Dr Duffy secured over the shares in BHL and also to redeem Mr Flynn’s loans with a Nama company.