Businessmen accuse bank over access to “ransom strip”

Two businessmen believe the value of a piece of land will increase by between €10 million and €15 million if a bank can “get its hands” on their adjoining retail park in Dublin, the Commercial Court has heard.

James Flynn, a director of Komady Ltd, and his business partner, Michael O'Reilly, are asking the court to continue an injunction stopping a receiver selling Belgard Retail Park in Tallaght, whose tenants include B&Q, Mothercare and Halfords.

The case is against Ulster Bank and the receivers appointed by the bank to the retail park. They want an injunction granted earlier this month to remain in place pending full hearing of the matter. The bank denies claims it contrived to manufacture a default situation so as to call in loans owed by Komady and Mr O'Reilly. It describes as unsubstantiated allegations it wanted the retail park in order to sell it along with an adjoining piece of land formerly owned by builder Bernard McNamara.

‘Random strip’

Bill Shipsey SC, for Komady and Mr O’Reilly, said the bank has also appointed a receiver over the McNamara land which can only be developed if it can get access via a “ransom strip” in the retail park.

The bank last August issued a letter of demand to his clients for immediate repayment of loans including a €24.4 million facility advanced in 2005 to acquire the retail park, counsel said. When the money wasn’t paid, receivers were appointed.

Komady and Mr O’Reilly say the bank had no entitlement to seek immediate repayment because the main loan facility was a 20-year term loan with 10 years left to run.

Mr Shipsey said they had refused the bank’s demand they set up an account into which the rent roll would be directly lodged. The retail park takes in €1.3 million rent annually and the property is increasing in value, counsel said.

The hearing continues.