Row linked to Ulster Bank €1 billion asset sell off may end up in court this week

A legal row between Ulster Bank and two borrowers whose loans form part of its €1.1 billion asset sell off is threatening to boil over into the High Court this week.

Ulster and its parent Royal Bank of Scotland (RBS) recently put €1.1 billion in property loans on the market in a portfolio called Project Achill as part of their plan to clear their books of €9 billion in debt.

However, two companies backed by developer brothers Michael and Rick Larkin began legal action against Ulster Bank earlier this year following a dispute related to an €87 million loan to the businesses secured against 208 homes in Tyrellstown, Co Dublin.

The loan makes up pool E in the overall project Achill portfolio. It is understood that lawyers for the two companies, Vieira Ltd and European Property Fund plc, have asked Ulster Bank if it has made this known to potential bidders for the debt.

The lawyers warned the bank that their clients would go to the High Court this week if the bank had not confirmed by yesterday that it had made details about the legal row available to potential bidders through the data room it is using to promote the project Achill sale.

Court order

They informed the lender that they would seek a court order demanding that it place the information in the data room if confirmation from the bank was not forthcoming.

Ulster Bank’s lawyers responded to this yesterday and it is believed that the information relating to the Viera and European Property Fund cases is and has been available to potential bidders. Earlier this year the bank rejected an offer from the Larkins’ companies to purchase the loans using finance from a third party whose backing they sought following an approach from Ulster suggesting that they do this.

Other offers

It is understood that the bid was 10 per cent of a number of other offers solicited for the €87 million loan at the time.

The Tyrrelstown properties are now estimated to be worth €57.3 million, according to a post on finance website Costar. The post, which has since been removed from the site, said that they are generating more than €2.7 million a-year in rent.

Neither party would comment on the dispute nor the threat that it may result in further legal action this week.

News that Ulster and RBS launched project Achill emerged in recent days. The overall portfolio encompasses loans with an estimated face value of €1.1 billion, but which are likely to be sold at a discount to this. Over 80 per cent of it is Irish debt.

The sale is part of the Scottish-based group’s plans to dispose of around €9 billion worth of boom-era property debt.Along with the Larkins, some of the individuals involved include Paddy McKillen and developer Bernard Carroll.