AIB has obtained a conditional court order giving the bank a charge over €2.7m worth of shares held by or on behalf of businessman Tony O’Reilly in the Dromoland Castle holding company.
The order is aimed at giving the bank priority over Mr O’Reilly’s other creditors in relation to the shares in AIB’s continuing efforts to recover a €22.6m judgment entered against him last June.
Inclusive of interest, and following the sale of certain assets, his total indebtedness to AIB is €15.2m.
Mr Justice Brian McGovern granted AIB the order following an ex-parte application made by its lawyers in the Commercial Court yesterday.
He also granted liberty to the bank to notify Dromoland Castle Holdings Ltd (DCHL), Newmarket-on-Fergus, Co Clare, of the making of the order. He further granted it liberty to notify the making of the order to Wall Street investment institution BNY Mellon National Association to which the shares are secured.
In an affidavit, AIB manager Bernard Carroll says Mr O’Reilly, who has a home in the Bahamas, told the bank on April 20 of a proposal to enter a “composition with his creditors under Bahamian law”, similar to personal insolvency arrangements here.
Mr O’Reilly provided a statement of his assets and liabilities saying 8,216 shares in DCHL were secured to BNY Mellon and were valued at €2.74m, based on an indicative offer, Mr Carroll says. The statement also said Mr O’Reilly’s debt to BNY Mellon stood at around €6.2m.
AIB has no knowledge of BNY Mellon’s security interest in the DCHL shares, Mr Carroll says. BNY Mellon holds a second ranking mortgage over Mr O’Reilly’s Bahamian home, “Lissadell”, Lyford Cay.
The net value of Lissadell is around €18.5m and Mr Carroll says it appears there exists sufficient equity from the sale of the property for BNY Mellon to be fully repaid.
There is also sufficient equity for the full repayment of €7.4m to EFG Bank & Trust (Bahamas) Ltd which has a first ranking charge over the property.
If BNY Mellon looked to the Bahamian property, along with a €227,000 investment fund it also has recourse to, it would not need to rely on its security interest in the DCHL shares, Mr Carroll says.
AIB has also objected as to the jurisdiction and as to the correct procedure used by Mr O’Reilly to start a deal with creditors under Bahamian law, he says.
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