A US bank being sued by Irish Press plc claimed in the High Court yesterday that the Irish company, if it lost its action, would not he in a position to pay the bank's legal costs.
Warburg Pincus and Co International Ltd denied it had induced Irish Press plc to enter into a joint venture agreement with Ingersoll Publications Ltd.
The arrangement, the Irish Press claims, caused severe loss and damage to Irish Press plc.
The US bank applied to the court for an order directing Irish Press plc to give security for the bank's legal costs in the intended action. Mrs Justice McGuinness reserved her decision.
Dr Eamonn de Valera, managing director of Irish Press plc, said in an affidavit the bank's claim was unfounded. Irish Press plc had substantial assets.
Mr Michael Collins SC, for Warburg Pincus, said it was estimated that the action would be at hearing for six weeks and legal costs for his clients could exceed £540,000.
An accountant, Mr Patrick McSwiney, on behalf of the bank, said in an affidavit that Irish Press plc had seven subsidiary companies. The Press titles ceased publication in May 1995 and he believed they now had virtually no value.
It was impossible to confirm the value given for investments in subsidiaries in the group accounts, and in particular impossible to determine to what extent these investments arose from intercompany transactions.
Mr McSwiney said there were a number of claims being pursued against the company, notably a claim for £893,408 in respect of alleged underfunding of the employees' pension fund.
The possibility that any of these claims might result in judgment being given against Irish Press plc created additional concern.
Dr de Valera said that as a result of representations made by Warburg Pincus, his company was induced to enter into negotiations and agreements with the Ingersoll organisation.
His company had substantial assets. He believed the valuation of the newspaper titles was of no relevance to the application before the court.
Dr de Valera said Mr McSwiney had claimed it was not possible to establish the companies involved in inter company transactions. He [Dr de Valera] believed there was no necessity to seek to establish the identity of those companies and group accounts had set out precisely the group's position.
In relation to the claim of alleged underfunding of the employees' pension fund, Dr de Valera said Mr McSwiney was greatly overstating the nature of the claim and of the possibility of judgment being obtained against Irish Press plc. His company had a full defence to the claim.
The group balance sheet at March 31, 1995 listed assets of £3.861 million. He believed net assets now amounted to £2.595 million.