NATIONAL IRISH Bank is suing Durkan New Homes (DNH), two of its directors and another company over alleged failure to repay loans totalling €37 million provided by the bank in relation to a development at Cabinteely, Co Dublin.
The action is against Durkan New Homes, its directors Don and Marian Casey and Tullycross Developments Ltd.
The bank is seeking orders requiring DNH and the Caseys to repay loans of €30 million while Tullycross is alleged to owe €7.5 million.
Mr Justice Peter Kelly admitted the action to the Commercial Court yesterday on the application of John Hennessy SC, for NIB, who said the bank intends bringing other proceedings relating to cross-guarantees by all four defendants which would have the effects of making all four defendants liable for the €37 million sum.
He said payment was sought on foot of the cross-guarantees on February 24th last and should have been made within a month of that date.
John McBratney SC, for the defendants, said his side would be arguing the bank's claim is limited to securities on certain properties specified in the loan agreements.
In its claim, the bank alleges €37.1 million is due under two separate but related loan agreements of March 2006.
It claims one loan agreement related to DNH, with offices at Ranelagh, Dublin, and Don and Marian Casey, of Woodbrook, Beech Park, Cabinteely, (the DNH agreement) while the second agreement related to Tullycross, with a registered office care of O'Donnell Sweeney Solicitors, Earlsfort Terrace, Dublin.
NIB claims the loan facilities were provided to refinance and further finance a development at Beech Park, Cabinteely.
It also claims DNH and Don and Marian Casey executed a guarantee and indemnity relating to Tullycross's obligations to the bank while Tullycross executed a similar guarantee relating to the obligations of the other parties.
Under the DNH agreement, it was claimed Don and Marian Casey executed two mortgages providing for co-ownership between the bank, on one side, and DNH and the Caseys on the other, of various properties at Beech Park/Bray Road, Cabinteely.
NIB claims Tullycross also executed two similar co-ownership mortgages.
The bank claims the loan agreements provided, during the term of the loans, the defendants' debts to the bank under the loans would not exceed 70 per cent of the combined value of identified properties in which circumstances, the bank's recourse against the defendants would be limited to the respective interests in the properties specified.
It is claimed the repayment date under each of the loan agreements was September 30th last when, it is alleged, the defendants paid only the interest due and failed to make the "bullet payment" of capital due under both agreements.
It is also claimed the defendants have failed to make interest repayments since then.
The bank also alleges the defendants' debts to the bank under the loan agreements had, by late September, exceeded 70 per cent of the combined value of the properties specified in the agreements.
The defendants had failed to reduce their indebtedness to restore compliance with the 70 per cent limit, it is also alleged.
On December 1st last, the bank wrote to all four defendants seeking repayment of €30 million from DNH and the Caseys and repayment of €7.5 million by Tullycross but the sums had not been repaid.