Developer agrees to €6.5m orders against him

A RETIRED building firm director has consented to summary judgment orders for some €6.5 million against him over unpaid development loans granted to the company.

Michael Fitzgerald, Gortard, Clarinbridge, Co Galway, consented at the Commercial Court yesterday to a judgment order sought by the Educational Building Society (EBS) arising from loans granted by it to Michael Fitzgerald Properties Ltd, also with an address at Gortard.

The case related to a loan for €4.174 million granted to the company in 2006 and a second loan for €3.595 million in July 2007 to fund the purchase and development of 21 mixed-use commercial units on a site in Roscommon town.

EBS claimed Mr Fitzgerald had with others entered in January 2007 into a guarantee over the liabilities of the company to the EBS.

After a July 2007 default on repayments of the loans, it claimed it called on Mr Fitzgerald last June to pay the outstanding sum of more than €6.4 million which had now, with interest, exceeded €6.5 million. No repayment was made and the EBS initiated proceedings for summary judgment.

When the case came before Mr Justice Peter Kelly yesterday, he was told Mr Fitzgerald was consenting to judgment in the amount sought.

In an affidavit, Mr Fitzgerald said he was retired and, while remaining a director, had not been actively involved for some years in the firm, which is part of the wider Fitzgerald group of companies.

He had taken “a back seat” around early 2006 on foot of medical advice. At the time of the transaction that had given rise to the court action, Mr Fitzgerald said he was not involved in the day-to-day operation of the company or any decisions surrounding the Roscommon site development.

He also said he had made some €210,718 available to EBS in March 2008 from the sale of property in Co Galway.

Mr Fitzgerald said he believed EBS advanced monies to the company in circumstances where it was aware the value of the security available for the loans was inadequate. He believed the EBS relied on artificially high values for certain properties.

In another affidavit, the EBS said Mr Fitzgerald had not sought release from his personal guarantee. He had also in December 2006 given the society a statement of affairs indicating assets of more than €17 million and the personal guarantees of Mr Fitzgerald and others were “a primary factor” in approving the loans, it said.