THE PERSONAL assistant to businessman Philip Lynch asked a solicitor, just hours before a €25 million loan was signed by the Lynch family, whether the final terms of that loan meant Allied Irish Banks would have recourse only to lands for repayment, the Commercial Court has heard.
The family received an e-mail from a solicitor with LK Shields early on February 8th, 2007, stating the final terms of the AIB loan involved no recourse to them, the court heard. They signed up to the loan at 3pm that day.
LK Shields claims what was said in that e-mail and others was based on information received from Ronan McLoughlin, a solicitor in another law firm, Matheson Ormsby Prentice, the previous evening but Mr McLoughlin has denied information provided by him could have led to a view in LK Shields that the loan was non-recourse.
In their continuing proceedings against AIB, LK Shields and MOP, Mr Lynch, his wife Eileen and their four children are seeking declarations aimed at preventing AIB from pursuing them for the €25 million. That money was advanced to them and developer Gerry Conlan to buy development lands in Waterford, now said to be valued about €4 million.
AIB insists all the borrowers are liable for the €25 million. Both solicitor defendants have denied claims of negligence and breach of duty against them and deny the family is entitled to indemnities against them.
Jim Gollogley, a partner in LK Shields in 2007, said yesterday the firm’s retainer from the Lynch family relating to the Waterford transaction was limited to a co-ownership agreement and did not include financing of the deal. The Lynch family never instructed the firm to seek a non-recourse loan, he said.
The court heard a draft loan facility letter issued by AIB on February 7th, 2007, contained a special condition limiting the bank’s recourse for the €25 million to Mr Lynch and Mr Conlan. Later that day, the bank issued a revised facility in which that condition was deleted with the effect, AIB claims, of extending recourse to the entire Lynch family and Mr Conlan.
