Fund to pursue former Gaelectric boss for €10.6m

A fund is pursuing a Dublin businessman in the Commercial Court for a €10.6 million judgment.

The summary judgment application by LSF VIII Pine Investments (Gaelectric) Designated Activity Company against Eamonn McGrath, Thorncastle Street, Dublin, was admitted, on consent of the sides, to the court on Monday.

Mr Justice Brian McGovern fixed it for hearing on March 14th.

The case arises from a settlement deed under which, the fund claims, about €10.6 million became due and owing by Mr McGrath in November 2017. After a demand for repayment was not met, it issued the legal proceedings.

It claims Mr McGrath agreed to enter into the settlement deed in return for the fund releasing him of obligations under a 2005 guarantee and indemnity provided by him to the fomer Anglo Irish Bank. After Anglo was nationalised, the guarantee was taken over by Irish Bank Resolution Corporation and later sold on to the fund.

Mr McGrath, the fund claims, provided obligations to IBRC concerning the debt of a company, Finance Life. The entire Finance Life debt was some €27 million and, under the settlement deed, Mr McGrath agreed to pay €11 million by the end of March 2017, it is claimed.

Shares

The settlement also provided he was to transfer more than eight million shares owned by him in another company, Gaelectric Holdings plc, to the fund, it is claimed. The shares were security for Mr McGrath's obligation, under the settlement deed, to pay €11 million on or before March 31st, 2017 if that sum was not paid by then, it claims.

The settlement also provided the shares could be sold by the fund if no initial public offering (IPO) of Gaelectric Holdings plc had taken place and they had a value of less than €5 million. If Mr McGrath sold the shares, he was liable to pay any shortfall between the sum obtained for those and the sum of €11 million, it is claimed.

The fund says an IPO never occurred and it obtained information at a shareholders’ meeting last October that the entire share capital of Gaelectric Holdings plc was between nil and €5 million.

Mr McGrath’s shares represented 8.37 per cent of the entire Gaelectric shareholding and the maximum value of his shares was €418,500, well below the €5 million value, the fund claims.

That meant the conditions for it to sell the shares were met and it sold them for €418,500, leaving Mr McGrath with an outstanding liability of €10.6 million which remains due and owing, it contends.