The National Assets Management Agency (Nama), in the first court application of its type, has secured multi-million summary judgment orders against three businessmen over unpaid loans to their companies by Bank of Ireland.
The unpaid loans to Patrick Shovlin and hoteliers Patrick and Anthony Fitzpatrick included a €280 million loan to a company for the Beacon South Quarter development in Sandyford.
In the Commercial Court today, Mr Justice Peter Kelly queried why the bank had agreed to limit the businessmen’s liability under guarantee for that amount to about 5 per cent of the sum due.
Summary judgment for some €38.5 million was entered against Mr Shovlin and for some €22 million each against the Fitzpatricks in favour of Nama today by Mr Justice Kelly at the Commercial Court.
Ulster Bank immediately afterwards secured a €6.4 million summary judgment order against Mr Shovlin, bringing total orders against him to almost €45 million, and €3.27 million summary judgment against both Fitzpatricks, bringing their total to more than €25 million each.
Mr Justice Kelly observed “it hasn’t been a good day” for the three. The defendants did not defend any of the proceedings.
In relation to the €280 million Beacon quarter loan, advanced from 2006, Mr Justice Kelly asked where was “the commercial logic” in Bank of Ireland agreeing to limit the liability under guarantee to such an extent that there was no recourse to about 95 per cent of the debt due by the company. “Why would a bank do that?” the judge asked.
Rossa Fanning, for Nama, said he didn’t have an answer to that question but it appeared the bank’s recourse was intended to be the assets of the company, the Beacon Project, as the loans would have been advanced when the project was expected to yield better returns. While he doubted there was any reality to that expectation now, we are where we are, counsel said.
Mr Fanning also stressed Nama was not compromising its own entitlements as it had brought the proceedings suing for all that it was entitled to under the BoI contracts.
Counsel was moving the proceedings by a Nama company, National Asset Loan Management Ltd, against Mr Shovlin, Turnberry, Kerrymount Avenue, Foxrock, Dublin; Patrick Fitzpatrick, Dargle Lodge, Cookstown Road, Enniskerry, Co Wicklow and Anthony Fitzpatrick, Amberley, Kerrymount Avenuem, Foxrock.
Nama brought the proceedings over guarantees provided by the three over loans by Bank of Ireland, including a loan to part finance the bank's own headquarters at Baggot Street, Dublin 2, and loans for the Beacon development.
In the proceedings over the Beacon quarter loans, Mr Justice Kelly noted the bank had advanced €280 million to a company, Landmark Enterprises Ltd, but had in contract documents reduced the defendants’ liability under a guarantee of that facility to less than 5 per cent of the sum due. A receiver was appointed over the assets of Landmark last July and the loan remains unpaid.
Mr Fanning said he could not explain the commercial reasons that may have informed the contractual agreement between the bank and the defendants. The claim under the guarantee was confined to €25 million in the case of Mr Shovlin and half that sum in the case of the two other defendants, he said.
The case also related to the defendants' guarantees of a €10 million loan related to the financing of Bank of Ireland headquarters at Baggot Street, Dublin 2. While €10 million was drawn down, the facility allowed limited recourse in the sum of €8 million to Mr Shovlin and for €4 million each in the case of the Fitzpatricks.
Mr Fanning said it was clear there had been no repayment of the €10 million and the proceedings against the three defendants were brought by Nama as the bank was a participating institution in Nama.
Mr Justice Kelly said Nama was entitled to recover judgment for €8 million against Mr Shovlin and €4 million each against the Fitzpatricks relating to that facility.
Nama also sought and secured summary judgment orders of €5.53 million each against the three defendants over their guarantees of unpaid loans provided to their company, Deileon Ltd, for refinancing of directors loans and to finance a loan to Landmark Enterprises.
