THE FAMILY of businessman Seán Quinn have brought legal proceedings against Anglo Irish Bank claiming loans of €2.34 billion are unenforceable because they were issued for “an illegal objective of market manipulation” to support the bank’s share price.
The action by Patricia Quinn and her five children – Aoife, Colette, Brenda, Ciara and Seán Quinn jnr – arises from events of the past two years that led to the family losing control of companies in the Quinn Group.
Mr Justice Peter Kelly transferred the case yesterday to the Commercial Court.
Aoife Quinn said in an affidavit that the family signed personal guarantees in late 2008 over certain loans by Anglo to Cypriot-registered companies owned by them, without being told of the “precarious” financial position of Anglo.
The nature of the loan documents was never discussed with them, she said. On these and other grounds, the family claims Anglo was not entitled to appoint Kieran Wallace receiver last month over shares in Quinn Group companies.
They allege negligence, breach of duty and intentional and/or negligent infliction of economic damage. While unable at this point to give the precise value of the damages claim, Aoife Quinn said the gross sales of Quinn Group (ROI) – the overall ownership company in the group – were €2.116 billion in 2007, with profits of €453 million, and the business was “a substantial going concern”.
The net assets of that company were reported at €753 million in December 2007, she added.
The judge noted that none of the guarantees provided for the Anglo loans were dated, while copy documents of two personal guarantees in the names of Aoife Quinn and Seán Quinn jnr over loans by Anglo to companies registered in Cyprus were unsigned.
When he asked Paul Gallagher, for Anglo, whether the original guarantee documents were signed, Mr Gallagher said he understood the documents were in order, but would make inquiries.
Aoife Quinn said the action was brought in the plaintiffs’ capacity as owners of shares in several companies, including Slieve Russell Hotel, Quinn Quarries, Quinn Group (ROI), Quinn Group Hotels, Quinn Finance Holding and Quinn Group Properties.
The family was claiming charges made in favour of Anglo from late 2003 up to 2009 over shares held in those companies were invalid, unenforceable and of no legal effect. They want declarations their undated guarantees provided to Anglo over the liabilities of several Cyprus-registered firms were invalid and unenforceable.
Outlining the background, Ms Quinn said Bazzely Consultadori Economica E Particpacoes, a Madeira-incorporated company owned by the Quinn children, made investments of €750 million from “Quinn resources” to fund CFD (contracts for difference) positions in Anglo before the end of 2007. After September 2007, as Anglo’s share price declined, it advanced €2.34 billion to various Quinn companies, she said.
These advances were made in the full knowledge they were only to be used to support “CFD positions” in relation to Anglo shares and those shares were ultimately held by the children.
On October 7th, 2008, some €77.17 million in loans were granted to each of five Cypriot companies owned by the Quinn children, while €102 million in loans were made to another Cypriot company owned by Patricia Quinn. These loans were then used to buy shares in Anglo.
The personal guarantees and share pledges were “manifestly improvident” and/or “unconscionable” when executed because they were entered into in the context of borrowing to support Anglo’s share price in circumstances where Anglo, its servants or agents, knew of the “precarious financial position” of Anglo but the plaintiffs did not, she said.
