Quinn family claim €2.3bn Anglo loans ‘unenforceable’

THE family of businessman Sean Quinn have said loans of €2.34 billion made by Anglo Irish Bank to various Quinn companies and Cypriot-registered companies are unenforceable because they were issued for “an illegal objective of market manipulation” — support of the Anglo share price.

The action by Patricia Quinn and her children, Aoife, Colette, Brenda, Ciara and Sean Jnr, arises from events of the past two years that led to the family losing control of companies in the Quinn group.

Mr Justice Peter Kelly transferred the case yesterday to the Commercial Court. It involves the largest ever claim in the court’s seven-year history and is likely to be heard early next year.

Aoife Quinn said in an affidavit the plaintiffs signed personal guarantees in late 2008 over certain loans by Anglo to Cypriot-registered companies owned by the family without being told of the “precarious” financial position of Anglo. They had no independent legal or financial advice and the nature of the loan documents was never discussed with them, she said.

The lending by Anglo “was in support of an illegal objective of market manipulation” prohibited by the relevant EU Directive on Market Abuse, she said.

The lending was “tainted with illegality, or was intended to support an illegal purpose, such that the said loans are not enforceable.”

On those and other grounds, the family claim Anglo was not entitled last month to appoint Kieran Wallace as receiver over shares in several Quinn group companies. They also claim the bank cannot pursue them under the guarantees for repayment of the loans to the Cypriot companies.

They also claim they are entitled to hundreds of millions of euro in damages as a result of the actions of the bank. They allege negligence, breach of duty and intentional and/or negligent infliction of economic damage.

While unable at this point to give the precise value of the damages claim, Aoife Quinn said the consolidated gross sales of Quinn Group (ROI) Ltd was €2.116bn in the period to December 31, 2007, with profits of €453 million, and the business was “a substantial going concern”.

The net assets of that company was reported in its statutory accounts at some €753m in December 2007, she added.

Yesterday, Mr Justice Kelly observed that the case is likely to last several weeks and made directions for the exchange of legal documents with a view to having the case heard early next year.