Lynch PA asked if AIB family loan was nonrecourse hours before deal, court told

THE personal assistant to businessman Philip Lynch asked a solicitor, just hours before a €25 million loan was signed by the Lynch family, whether the final terms of that loan meant AIB would have recourse only to lands for repayment, a court has heard.

The family received an email from a solicitor with LK Shields early on February 8, 2007, stating the final terms of the loan involved no recourse to them, the Commercial Court heard yesterday. They signed up to the loan at 3pm that day.

LK Shields claims what was said in that email and others was based on information received from Ronan McLoughlin, a solicitor in another law firm, Matheson Ormsby Prentice (MOP), the previous night, but Mr McLoughlin has denied information provided by him could have led to a view in LK Shields that the loan was nonrecourse.

In their proceedings against AIB, LK Shields and MOP, Mr Lynch, his wife Eileen and their four children are seeking declarations aimed at preventing AIB from pursuing them for the €25m.

That money was advanced to them and developer Gerry Conlan on February 8, 2007, to buy development lands in Waterford, now said to be valued at about €4m.

AIB insists all the borrowers are liable for the €25m. Both solicitor defendants have denied claims of negligence and breach of duty against them and deny the family is entitled to indemnities against them.

Yesterday, Jim Gollogley, a partner in LK Shields in 2007, said the firm’s retainer from the Lynch family relating to the transaction was limited to a co-ownership agreement and did not include financing of the deal. The family never instructed LK Shields to seek a nonrecourse loan, he said.

The court heard a draft loan facility letter issued by AIB on February 7, 2007, contained a special condition limiting the bank’s recourse for the €25m to Mr Lynch and Mr Conlan.

Later that day, the bank issued a revised facility in which that condition was deleted with the effect, AIB claims, of extending recourse to the entire Lynch family and Mr Conlan.

Cross-examined by Michael McDowell, counsel for the Lynchs, Mr Gollogley said he had a concern, after seeing the first facility sent February 7 and emails of another solicitor in LK Shields, Imdaad Suleiman, whether recourse was being extended to the Lynch children. He had emailed Mr Suleiman, who later emailed that he was just off the phone with Ronan (McLoughlin of MOP), the security was to be the property and the condition of joint and several liability was to be removed.

Mr Gollogley said he emailed Robert Burns, Mr Lynch’s personal assistant, at 19.07pm on February 7, stating the revised facility would have no mention of joint and several recourse against the individual borrowers. He agreed his email was meant to convey the information the loan was to be recourse to land only.

Mr Burns emailed Mr Suleiman the following day asking was the loan to be recourse to land only and Mr Suleiman replied the loan involved no recourse to the borrowers. Mr Gollogley said Mr Suleiman was relaying what he was told by MOP. He agreed the recipients of that email were not put on notice the family was being put back “into the frame” in relation to liability for the €25m.

The case continues.

More in this section

IE_180_logo
Price info

Subscribe to unlock unlimited digital access.
Cancel anytime.

Terms and conditions apply

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up