Accountant ‘can but won’t pay debts’

ANGLO Irish Bank has claimed a chartered accountant with an estimated net worth of €10 million can but won’t pay a debt of €650,000 to the bank.

After the Commercial Court heard yesterday that Anglo has no security for its loans to Bryan Phelan, Mr Justice Peter Kelly remarked: “More fool the bank for lending with no security.”

Anglo has brought proceedings against Mr Phelan, of Ardilea Wood, Ardilea, Dublin 14, and carrying on business at Orchard House, Clonskeagh Square, Dublin 4, seeking to recover sums of €525,884 and stg£97,107 (€114,596), plus interest, under a loan facility of 2006.

The bank claimed it was in constant correspondence with Mr Phelan since January 2008 seeking payment of arrears and proper service of the sums due under the facilities. It also said, while a facility letter referred to security, it was ultimately not possible to create the legal charge described in the letter and therefore the bank has no security for the loan.

Mr Phelan had indicated proceeds of a property transaction in Lanzarote would allow him meet his loan obligations, Anglo said.

Last February he sent two cheques to Anglo to go towards repayment but asked it not to lodge them and rather hold them for a period and later said there were no funds in his account to honour the cheques.

Last September, at Anglo’s request, Mr Phelan had sent the bank a statement indicating his net worth as assessed by him at June 30 last stood at almost €10m.

Despite assurances given by Mr Phelan in relation to clearing interest arrears and payment of capital, none of those lead to repayment, Anglo said. In October, the bank demanded immediate payment of sums due and owing under the facility.

The bank said it believes Mr Phelan is an individual of considerable personal wealth who has persistently failed to make good his representations to the bank about repayment dates and his willingness to meet his obligations.

Counsel for Anglo agreed with Mr Justice Kelly yesterday the bank essentially believes Mr Phelan can, but won’t, pay the debt. She also argued there was no undue delay by the bank in pursuing the debt as Mr Phelan had constantly assured the bank it would be repaid.

Aidan Redmond, counsel for Mr Phelan, opposed the case being transferred to the Commercial Court on grounds the sum involved fell below the €1m threshold of that court and the bank had failed to show any special circumstances justifying transfer. There was extraordinary delay by the bank in advancing its claim and it had no security over the loans since 2006.

Mr Justice Kelly said the bank believed it had been “led along” by Mr Phelan.

The bank foolishly lent money with no security and Mr Phelan persuaded it over a long period not to move against him, he noted.

Because the amount due was under the €1m threshold for admission and the bank had failed to show any special circumstances justifying the case being fast-tracked, he would not admit it the Commercial Court.

The case will now proceed at a slower pace in the ordinary High Court list.