Former AIB executive had debts up to €95m, court hears

Promontoria seeking summary judgments of €8m against John Hughes and two others

Three judgment orders are being sought  by Promontoria (Aran) Ltd, a subsidiary of Cerberus, against Mr Hughes, his wife Margaret, and former AIB executive director Tom Browne. Photograph: Bryan O’Brien

Three judgment orders are being sought by Promontoria (Aran) Ltd, a subsidiary of Cerberus, against Mr Hughes, his wife Margaret, and former AIB executive director Tom Browne. Photograph: Bryan O’Brien

 

A former senior executive with AIB in Galway, John Hughes, had debts of between €85 million and €95 million in 2015, with most of the money due to the National Asset Management Agency (Nama) or the Irish Bank Resolution Corporation, the High Court has been told.

At the time Mr Hughes had a range of residential and commercial investment properties, according to a 2015 statement of affairs.

The document was mentioned in a case where Mr Hughes, his wife Margaret, and former Anglo Irish Bank executive director Tom Browne are resisting summary judgment orders for a total of more than €8 million.

Mr Hughes is a former head of business banking with AIB Eyre Square, Galway, and was described in court as a property developer.

Three judgment orders are being sought on a summary basis by Promontoria (Aran) Ltd, which in 2015 bought loans from Ulster Bank. Promontoria is a subsidiary of the US Cerberus group. The defendants contested the application and Mr Justice Max Barrett has reserved his decision.

A judgment against Mr Hughes is being sought for €3.5 million arising from loans linked to property in Barna, Oughterard and Clifden, Co Galway, and a property on Edward Place, Donnybrook, Dublin 4.

Residential investment property

A judgment against Mr Hughes and his wife, for €1.6 million, is being sought, with the debt being linked to a residential investment property, since sold, at Ailesbury Wood, Dublin 4.

A third judgment being sought is against Mr Hughes and Mr Browne, for €3.35 million, and is linked to property at Liosbán, Tuam Road, Galway, and the Quayside Shopping Centre, Sligo.

The court was told by Declan McGrath SC, for Promontoria, that an offer to settle the total debt, of more than €8 million, in return for a payment of €500,000 and the voluntary sale of properties with an estimated value of €1.2 million, was not taken up by the defendants when made. However, a letter from the defendants on Wednesday said they could now take up the offer, using funds borrowed for the purpose.

Mr McGrath described as “incredible” an assertion by Mr Hughes that he had an oral agreement with Ulster Bank that, following the sale of the Ailesbury Woods property, the residual debt associated with that property would not be pursued.

Residual debt

He said a residual debt of more than €1 million linked to the property was included in the 2015 statement of affairs, which was signed by Mr Hughes and his wife. The property had been sold in March 2014.

The court heard that Mr Hughes has sworn that the statement of affairs did not reflect an agreement he had with Ulster Bank via relationship manager Marie Neenan O’Brien and that he had mentioned the agreement with Ulster Bank early on in his dealings with Capita, who were acting as agents for Promontoria.

James Doherty SC, for the defendants, said Mr Hughes had on other occasions referred to an agreement he had with Ulster Bank that his properties be sold and no residual debt be pursued.

The court heard that a complaint has been made to the Financial Services Ombudsman about how the settlement offer including the payment of €500,000 was presented. Mr Doherty said that if the summary judgment application was successful, he would be asking for a stay pending the outcome of the complaints process.

No prejudice

If the complaint was successful and the deal involving the €500,000 payment was put back on the table, his clients would avail of it. There would be no prejudice to the plaintiff as all of the defendants’ assets were encumbered and there was no question of Promontoria losing out should others seek orders against his clients.

“They have ongoing earnings from work, and that’s it,” he told Mr Justice Barrett. His clients were willing to give undertakings in relation to the dissipation of assets.

Mr McGrath said the ombudsman could not dictate that the withdrawn offer now be agreed. He said a statement of affairs for Mr Browne showed borrowings “from a large number of financial institutions”. His client risked being prejudiced if a stay was granted.

In relation to the loans to Mr Hughes and his wife, and Mr Hughes and Mr Browne, the defence argued that the facility documents were not signed by the debtors.