Finance fund sues solicitor and developer over €6.2m Limerick loan

A fund is suing a solicitor and a property developer for €6.2 million in relation to loans advanced to their partnership for the purchase and development of a hotel property in Co Limerick.

Feniton Property Finance DAC is suing lawyer David Coleman and John Joseph Murphy, both of Aravan Stables, Ferndale Road, Rathmichael, Co Wicklow. They traded under the Limestone Partnership.

Feniton’s case against Mr Coleman was admitted on consent to the Commercial Court by Mr Justice Robert Haughton on Monday. The application to admit the case against Mr Murphy was adjourned for two weeks.

The judge directed documents could be sent to Mr Murphy by registered or ordinary post after a summons server was told at two different addresses that he did not live there anymore.

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Feniton claims that, between September 2000 and March 2007 Bank of Scotland Ireland (BoSI) advanced a number of loans for the purchase of the Castle Oaks Hotel in Castleconnell and acquisition and development of a number of housing sites beside the property.

Overdraft facilities

The money was also to provide equity release to the partnership for investment purposes and overdraft facilities.

The fund claims BoSI also made available loan facilities to the Summerhill Consortium, under a guarantee provided by the two men, to finance the acquisition of 22 hotel suites at the Castle Oaks, Feniton says.

The loans were secured on the hotel property and on lands at Stradbally North, Co Limerick.

In July 2015, BoSI sold the loans to Feniton. The fund later demanded repayment and, when that was not forthcoming, a receiver was appointed.

Feniton claims a settlement agreement was made with the defendants in May 2018 with various conditions including they would deliver up possession of the secured properties and confirm the position of Gobnait O’Connell as hotel manager would be made redundant.

Feniton claims the defendants have breached that agreement including by failing to confirm the redundancy of Ms O’Connell to the satisfaction of the receiver by May 2018. It also claims they have failed to ensure all creditors of the hotel would be paid by May and alleges valuable artwork was removed from the hotel.

As a result, the fund is seeking judgment for €6.2 million against both men.