The legal action between reclusive businessmen Paddy McKillen and the twin Barclay brothers over the ownership of the five-star Claridges, Connaught and Berkeley hotels in London began today.
Mr McKillen is suing David and Frederick Barclay over their attempts to take control of Coroin, the company behind the hotels, in a case in the High Court in London that has drawn in Irish investor Derek Quinlan and the National Assets Management Agency.
Today, lawyers began outlining evidence to judge Mr Justice David Richards at the start of a High Court trial in London.
Belfast-born. Mr McKillen owns 36 per cent of the shareholding in Coroin, while the Barclays have taken either ownership or control of the remaining 64 per cent shareholding over the past 15 months. The brothers acquired the debt secured on Mr Quinlan’s 35 per cent stake in the hotels last year.
Mr McKillen claims that “company affairs” have been conducted in a “manner unfairly prejudicial to his interests” and wants damages.
The Barclay brothers, who grew up in London, are contesting his claims at a hearing expected to last for three weeks.
In written arguments given to the judge, Philip Marshall QC, for Mr McKillen, said the Coroin company was set up in 2004 to buy hotels. He said Mr McKillen was a director and “substantial shareholder”.
He said the shareholders’ relationship was based on “trust and confidence” and an agreement contained “express obligations of good faith”.
Mr McKillen had been the “most active” shareholder and had overseen “developments” which had been a “success”, said Mr Marshall.
The value of “the hotels” had increased from £530 million to £985 million over six years and Coroin was worth more than £1 billion, he added.
Mr Marshall said the Barclay brothers were “well-known businessmen” whose interests also included London hotels the Ritz and Cavendish. He said they had made attempts to obtain “complete control” of Coroin and used “various tactics” which involved “infringements” of Mr McKillen’s rights under a shareholders’ agreement.
Mr McKillen contended that he had been a victim of “unlawfulness” and “unfairly prejudicial conduct”, he said.
The Barclay brothers deny Mr McKillen’s allegations.
“Both Sir Frederick and Sir David deny the allegations against them,” said Lord Grabiner QC, for the Barclay brothers, in written submissions given to the judge. “It is clear that these serious allegations have been made for tactical reasons, to try to embarrass Sir Frederick and Sir David and to tarnish their reputations.”
Lord Grabiner added: “What Mr McKillen does not want or like is that he may be squeezed out of Coroin because he cannot afford to stay in (ie pay the sums required to put Coroin on a sound financial footing).
“Sir Frederick and Sir David cannot be held responsible for this. It is a fact of life that if you want to be a shareholder of a company with a value approaching £1 billion, but you have no money, you are likely to lose out in the end.”
He said what the Barclay brothers had done was “lawful” and “certainly intended and believed to be lawful”.
Additional reporting: PA