Sale of assets will not cover €19m owed

ACC BANK said Mick Wallace’s assets will not realise sums sufficient to cover “or substantially cover” the €19 million it is owed by his company.

Mr Wallace attended at the Commercial Court yesterday when ACC applied to Mr Justice Peter Kelly for the judgment orders. James Dwyer SC, for Mr Wallace, said the defendants had tried their best to co-operate with the bank, and the situation was “regrettable”.

Counsel told the court there were other creditors and the defendants could not resist the bank’s application.

Mr Justice Kelly said the case was appropriate for transfer to the Commercial Court, and he would enter judgment as sought in the sums of €19,166,680 against M&J Wallace Ltd (in receivership), and Mr Wallace. The order against Mr Wallace arises from his personal guarantees of loan facilities made between 2004 and 2008.

The judgment orders were sought by Alison Keirse, for the bank, who said payments had been made under some of the facilities and that the defendants had been co-operative with the bank.

Counsel said a good working relationship was in placed between the bank and defendants in 2009 and 2010 and an agreed structure was in place to reduce the debts.

This changed later in 2010, when the bank received a report on the financial status of the company indicating it was seriously insolvent. The bank appointed a receiver in May 2011 and later decided to issue the court proceedings.

When Mr Justice Kelly asked whether ACC was concerned other creditors may seek to move against the defendants, Ms Keirse said she had no firm instructions in that regard but that other actions might occur as a result of the bank’s move.

Declan Taite of FGS was appointed by ACC in May to a range of Mr Wallace’s assets, including the Italian Quarter on Ormond Quay; the Behan Square apartment complex on Russell St near Croke Park; a site on the North Circular Road, Dublin; and development land in Rathgar. The bank had fixed charges on those assets.

Mr Wallace previously said he owed €40m to various banks. These are understood to include Ulster Bank, AIB, and Bank of Scotland, as well as ACC.

ACC’s case related to loan facilities issued between June 2004 and April 2008. Each of the loans was personally guaranteed by Mr Wallace in his capacity as director and promoter of the business.

Payments were made under two of the facilities from drawdown until late 2010, while the progress of the other three loans were linked to the developments for which they were provided, the bank said.

The Russell St scheme was completed but, while it was generating income, it was not sufficient to discharge the borrowings in full, the bank said. Two of the loan facilities related to sites at Rathgar and North Circular Road which did not reach completion.

The bank said it had agreed an approach with the defendants to manage rental income from completed sites, and that this approach was pursued during 2009 and 2010.

ACC said it wished later in 2010 to adopt a further strategy for generating income from the secured assets, involving an agent for sale and the company giving full discretion to the bank and its agents to sell the secured asset properties as the bank saw fit, while also permitting the continued trading of the company.

In tandem with the sale strategy, the bank said it sought an assignment of all rental income from the Italian Quarter and a first charge over an account into which all rental income connected with the property secured to the bank was lodged.

In March 2011, the bank said its concerns regarding the company worsened because accounts for 2009 and 2010 remained outstanding, meaning there was “a strong likelihood” of it being struck off the companies’ register. The company also told the bank it had an outstanding Revenue bill of €1.4m and trade creditors of about €1.8m.

ACC engaged accountants to review the business, and their report, plus the company’s unwillingness to execute the proposed agent for sale agreement, led the bank to issue demands for repayment on May 16. The receiver was appointed the next day.

As of August 9, the sums due and owing by the defendants came to more than €19.16m plus ongoing interest, ACC said.

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