Court to rule on ‘calamitous’ sale

The High Court will decide today if it is to continue an order restraining Bank of Scotland selling to a hedge fund a total of €67m debt owed to the bank by a shipping firm which employs more than 300 people.

The Doyle Group wants to instead refinance its Bank of Scotland loans with Ulster Bank and claims sale to the Blue Bay fund would be “calamitous” for it and its workers.

The Doyle Group, a holding company for several firms providing shipping and warehousing services at all major Irish ports, claims the bank’s attempt to sell the debt to a third party amounts to breach of a contract between the parties of May last.

The group previously secured an interim injunction restraining Bank of Scotland transferring to any third party any right, interest or obligation under a loan agreement between the firm and Bank of Scotland of May 2012. It has asked the court to extend that order pending the full hearing of the dispute.

The group says it was in the process of refinancing its Bank of Scotland loans with Ulster Bank when it learned last month, much to its surprise, that Bank of Scotland had entered into a second process concerning selling the group’s debt to third parties. Bank of Scotland is seeking to sell its debt for €53m to the Blue Bay investment fund, it is claimed.

The group claims it had been represented to Bank of Scotland that no such assignments should happen. It fears, if the debt is sold to the hedge fund, that its assets could be stripped and sold off, destroying the companies and affecting several hundred jobs.

Bank of Scotland wants the injunction lifted and is opposed to the continuation of that order. It rejects claims that it has acted in breach of its agreement with the Doyle Group. It also claims that the hedge fund will act no differently to the bank in its dealing with the Doyle Group.

Bank of Scotland says it has entered into a deal with Blue Ray Hedge Fund to sell on the loan, and fears it may suffer damage if that deal does not go ahead. Bank of Scotland has also suggested to the court that the full trial of the dispute be given an early hearing.

Yesterday at the High Court, following the conclusion of submissions from both sides, Mr Justice John Cooke said he would give his ruling on the matter today.