Family awaits ruling on €25m development loan

THE Commercial Court will rule next month whether businessman Philip Lynch and his family have any liability to Allied Irish Banks for a €25 million loan issued to them to buy development lands in Co Waterford.

The case opened lastDecember, evidence ended last May and legal submissions were heard in June after which Mr Justice Michael Peart reserved judgment on the 27-day hearing. He indicated yesterday he expected to give judgment on November 15.

The legal costs of the case are expected to amount to several million euro.

Mr Lynch, his wife and four children — Judith, Philippa, Therese and Paul — brought proceedings against AIB and two law firms — LK Shields and Matheson Ormsby Prentice — in an effort to avoid AIB pursuing them over the €25m loan of February 8, 2007.

The loan was issued to the family and developer Gerry Conlan to buy 86 acres at Kilbarry, Waterford, for development. The bank has brought separate proceedings against Mr Conlan over the loan which will be dealt with later.

The final loan document was signed on February 8, 2007 by Judith Whelan, daughter of Mr Lynch, on behalf of the family, the court previously heard.

An earlier draft facility contained a special condition providing for recourse to Philip Lynch and Mr Conlan but that special condition was removed from the final loan facility with the effect, AIB claimed, of giving it recourse to all borrowers for the €25m.

The Lynch family claimed they always understood the loan would involve AIB having no recourse to them individually for payment and its recourse would be limited to the lands. The court heard the current value of the lands has been estimated about €4m while in 2007 values as high as €80m were suggested.

The family alleged the defendants were negligent in relation to how they dealt with the loan and claimed entitlement to be indemnified against any claim by AIB against them for repayment.

The defendants denied those claims. AIB contended the loan has full-recourse to all borrowers and counter-claimed for €25m judgment orders against the Lynchs.

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