Quinns say ‘no liability’ for €2.3bn Anglo loans

THE family of bankrupt businessman Sean Quinn are effectively making the “extraordinary” case they have no liability for loans of €2.3 billion advanced to support Anglo Irish Bank’s share price on grounds Mr Quinn and the bank were engaged in the “criminal offence” of market manipulation, the bank has told the Commercial Court.

The hearing of the case as advanced by the family would involve an extensive examination by the court of the conduct of the bank and Quinn companies, could take up to nine months and cost millions of euro, including an estimated €1 million for 900,000 documents being sought from the bank, said Paul Gallagher SC, for the bank.

He was opening the hearing of Anglo’s application before Mr Justice Peter Kelly for orders directing a preliminary hearing to determine key issues in the family’s case.

The bank wants the court to make preliminary findings on whether the family, in support of their claims the €2.3 billion loans were unenforceable, has the legal standing to make claims of breaches of the market abuse regulations (MAR) in relation to the funding of contract for difference (CfD) positions in Anglo or breaches of section 60 of the Companies Act.

It wants the court to decide that if any loans or part of loans were made to provide funds to meet CfD calls in Anglo, whether such loans breached the MAR or section 60.

The bank contends even if the €2.3bn loans are unenforceable, which it denies, additional loans of €500m are unrelated to the Anglo CfD loans and are enforceable and recoverable.

It also wants the court to rule whether an October 2008 refinancing of loan facilities issued in July 2008 to various Cyriot companies breached the MAR and/or section 60 and whether such loans are recoverable.

Mr Gallagher said the family was advancing a case that Mr Quinn “masterminded” a strategy of building up an investment in Anglo via a company owned by his five children, did “all of this gambling” as an agent for Anglo and exerted undue influence in relation to his family signing guarantees and share pledges over huge loans without their knowing of what was involved.

The court heard Mr Quinn’s five children have alleged they did not know a structure was set up in 2005 involving each of them owning 20% of a company, Bazzely, used for CfD transactions in Anglo.

They have claimed some funds advanced by Anglo were described as funds for “property acquisitions” but were knowingly advanced by Anglo to meet CfD margin calls.

The application for a preliminary hearing is being resisted by the family on grounds including that it is unlikely to shorten the trial, they want discovery of documents before finalising their claim and the bank — now the state-owned Irish Bank Resolution Corporation — is better resourced than they are.

Patricia Quinn and her five children — Ciara, Colette, Brenda, Aoife and Sean Quinn Jnr — initiated their action earlier this year.

The case continues on December 15.