US hedge fund Carval has withdrawn a bid for the well-known Dublin venue, the Market Bar, to be put into examinership, after reaching a deal on the steps of the High Court with the bar’s owner, led by financier Niall McFadden.
Carval’s Launceston Property Finance is understood to be owed about €900,000 by Mercroft Taverns on foot of a 2008 Anglo Irish Bank loan, which Carval acquired from the bank’s IBRC successor in 2014.
The so-called "vulture fund" Launceston subsequently became embroiled in a repayment dispute with the bar, whose owners also included the late entertainment industry figure, businessman John Reynolds, who died in October.
However, Launceston was unable to appoint a receiver to take control of the bar, as it lost the mortgage documents upon which its security is based. Instead, the fund sought last week to have Mercroft placed into interim examinership, before striking the deal with Mercroft outside the court on Friday.
In its petition, Launceston told the court that Mercroft was a subsidiary of an Isle of Man company, Lettuce Entertain U. Manx company documents show its directors are Mr McFadden, the deceased Mr Reynolds, and David Kelly, who previously worked with the Redquartz operation of developer Paddy Kelly.
The petition says 25 per cent of Mercroft is owned by the family of the late Mr Reynolds, while 75 per cent is owned by a trust linked to the family of Mr McFadden, a major dealmaker in the boom years through Boundary Capital.
It is understood that Mr McFadden, who along with many boomtime property financiers was declared bankrupt during the crash, had been backing the business interests of Mr Reynolds for several years before he died.
Mr McFadden is said to have invested in the bar incrementally over time, including buying out the interest in the pub of Mr Reynolds's former business partner, Jay Bourke. In all, sources say, Mr McFadden has put about €3 million into the pub.
In its petition, Launceston outlined its dispute with Mercroft over repayment of the loan.The papers say that, as well as the Market Bar, Mercroft is also the company behind the Chelsea Drugstore venue around the corner.
Launceston says that during its talks with Mercroft, it was told of a plan to open a new "private members club" above Chelsea Drugstore. The papers also reveal Market Bar is in a lease dispute with its landlord, Mark Conan.
The Carval fund told the court in its petition that Mercroft was “insolvent”. However, this was disputed by Mercroft, which produced bank statements showing it had about €1.5 million in cash.
In court on Friday, Launceston accepted that the bar was “solvent”. After several hours of talks, the court was then told that an agreement had been reached between the parties, and the examinership petition was being withdrawn. It is due back before the court on Monday.