Lands worth €31m in 2006 valued at €600k

DEVELOPMENT lands in Athlone valued in 2006 at €31 million have a current value of €600,000.

That was the claim made by Bank of Ireland at the Commercial Court when rejecting arguments by a developer that the sale of those and other lands offered reasonable potential for the bank to recover €17.4m from the developer under his guarantees of loans.

Mr Justice Peter Kelly said the €600,000 figure was “even more alarming” and put “into a cocked hat” the judge’s own view, from his experience in the Commercial Court in recent years, land values have fallen between 70%-80%.

The BoI valuation represented at fall of 98%.

John Hennessy SC, for BoI, said the €600,000 valuation was the figure his side had obtained.

The bank had also received a current valuation of some €4m for development lands at Sallins, Co Kildare, previously with a peak value of some €17.5m, he added.

Given such figures, the bank considered it was “not in any way likely” that it would recover its loans from sales of the lands in the forseeable future, counsel said.

John McCarroll, for developer Pearse Gately, said that, given such valuations, it “might be timely” to remind the bank of its duties to mortgagees. Mr Justice Kelly remarked the bank should be “well aware” of those duties.

The judge ruled the bank was entitled to judgment for €17.4m against Mr Gately under personal guarantees provided by him over loans to three of his companies. It was well settled law a bank which loans money and obtains charges and personal guarantees was entitled to take whatever action it chose to recover those monies, including seeking a money judgment, he said.

Mr Gately and others had executed guarantees over loans made on dates in 2004, 2006 and 2007 to his companies.


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