ACC Bank is seeking judgment orders for about €30 million against Friends First Managed Pension Funds Ltd and two businessmen arising from a facility advanced in 2007 to buy property in Clare and to pay off another loan.
The proceedings were transferred to the Commercial Court yesterday by Mr Justice Peter Kelly who noted that, if earlier negotiations between ACC and Sean Lyne and Noel Connellan had led to an agreement, Friends First Managed Pension Funds Ltd (the fund) would be “off the hook”. However, no agreement was reached in those talks.
The case arises from a facility of October 2007 agreed between ACC and the defendants under which the bank was to make available €25.2m to discharge an Allied Irish Banks debt secured on 33 acres at Gaurus, Ennis, Co Clare and to acquire an additional 61 acres at Gaurus.
The bank claimed that the loan facility letter had limited the fund’s liability in relation to repayment of the principal sum to the sum realised from sale of the bank’s security (the lands) and to 46.6% of interest.
It claimed Mr Lyne, of Golflinks House, Ennis, and Mr Connellan, Shanaway Road, Ennis were jointly and severally liable for repayment of €22m and for 53.4% of interest and costs.
The bank claimed the limitations on liability provided for in the 2007 facility letter would lapse if any provisions of a co-ownership agreement were materially varied without the prior written consent of the bank.
Such a material variation occurred about October 2009 without the prior written consent of the bank and therefore all three defendants were jointly and severally liable for €25.2m plus interest which in July 2010 stood at €5.3m, ACC claimed.
In April 2010, ACC demanded repayment of about €30m for principal and interest and later issued proceedings for recovery of the monies due.
After those proceedings were issued, the bank said it engaged in contacts with Mr Lyne and Mr Connellan in an effort to resolve matters but no satisfactory conclusion was arrived at.
Paul Sreenan SC, for the fund, objected yesterday to the proceedings being fast-tracked by the Commercial Court on the grounds of delay by ACC.
However, John Hennessy SC, for ACC, said the bank had been trying to resolve matters and avoid the need for litigation.
Mr Sreenan also agreed with the judge that, if an agreement had been reached between the bank and Mr Lyne and Mr Connellan, the fund would be “off the hook” and there would be no need to involve the fund.
Mr Justice Kelly said it was regrettable the bank had not informed the fund it was engaged in discussions with Mr Lyne and Mr Connellan and it should have been “kept in the picture”.
However, he believed the delay had been adequately explained in an affidavit by the bank and he would admit the case.
The judge made directions for the exchange of legal documents and adjourned the matter to October.
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