Nama calls in guarantees

 

IN THE first court application of its type, the National Assets Management Agency (Nama) has secured multi-million summary judgment orders against three businessmen – Patrick Shovlin and Patrick and Anthony Fitzpatrick – over unpaid loans to their companies by Bank of Ireland.

The loans include a €280 million loan to a company for the Beacon South Quarter development in Sandyford.

Mr Justice Peter Kelly queried why the bank had agreed to limit the businessmen’s liability under guarantee to about 5 per cent of the sum due.

Summary judgment in favour of Nama for €38.5 million was entered against Mr Shovlin and for some €22 million each against the Fitzpatricks, brothers who are members of the Fitzpatricks hotel family. When Ulster Bank immediately afterwards secured orders for €6.4 million against Mr Shovlin and €3.27 million against both Fitzpatricks, Mr Justice Kelly observed “it hasn’t been a good day” for the three defendants, none of whom presented a defence in the proceedings.

In relation to the €280 million Beacon Quarter loan, advanced from 2006, Mr Justice Kelly asked where “the commercial logic” was in Bank of Ireland agreeing to limit the liability to such an extent that there was no recourse to about 95 per cent of the debt due. “Why would a bank do that?”

Rossa Fanning, for Nama, said he didn’t have an answer but it appeared the bank’s recourse was intended to be the assets of the company, the Beacon project. The loans would have been advanced when the project was expected to yield better returns. While he doubted there was any reality to that expectation now, “we are where we are”, counsel said.

Mr Fanning said Nama was not compromising its position. It had sued for all it was entitled to under the Bank of Ireland contracts.

Counsel was moving the proceedings by a Nama company, National Asset Loan Management Ltd, against Mr Shovlin, Turnberry, Kerrymount Avenue, Foxrock, Dublin; Patrick Fitzpatrick, Dargle Lodge, Cookstown Road, Enniskerry, Co Wicklow and Anthony Fitzpatrick, Amberley, Kerrymount Avenue, Foxrock.

Nama brought the proceedings over guarantees provided by the three over loans by the bank, including a loan to part-finance the bank’s own headquarters at Baggot Street, Dublin 2, which had been acquired by a consortium including Mr Shovlin and the Fitzpatricks, and loans for the Beacon development.

The claim for Beacon Quarter under the guarantee was confined to €25 million in the case of Mr Shovlin and half that sum for the two other defendants, he said.

The case also related to the defendants’ guarantees on a €10 million loan related to the financing of Bank of Ireland headquarters. While €10 million was drawn down, the facility allowed limited recourse in the sum of €8 million to Mr Shovlin and €4 million each for the Fitzpatricks.

Nama also secured orders of €5.53 million each against the defendants over guarantees of unpaid loans provided to their company, Deileon, for refinancing of directors loans and to finance a loan to Landmark Enterprises.