ONE OF the State’s largest developers during the property boom, Liam Carroll, is being personally sued for €60 million in a move that will place further pressure on his huge but troubled business.
Earlier this year Mr Carroll negotiated support from his banks to allow him pay off suppliers and other creditors that were threatening to put his companies into liquidation.
The banks put up the money because “otherwise he would have gone into liquidation. The game was up,” according to one source with knowledge of the deal.
However, yesterday Irish Nationwide told Mr Justice Peter Kelly in the Commercial Court that it was seeking €60 million from Mr Carroll that it said it was owed and which was subject to a personal guarantee. The court was told Mr Carroll was contesting the claim and saying his guarantee had been replaced with a new arrangement that meant he had only guaranteed €30 million.
The court action is the first move on such a scale by a financial institution covered by the State deposit guarantee scheme against a major property developer.
Up to now the Irish banks are thought to have been holding off moving against any of the major developers, for fear such a move could lead to substantial assets being put up for sale, and new, low values being cited for such properties.
The collapse of any of the major property development groups prior to the coming into operation of the Government’s so-called bad bank, the National Asset Management Agency (Nama), could complicate that exercise, according to one legal source yesterday.
He said this would be so because a receiver would be obliged to comply with company law rather than operate to any Nama agenda.
Mr Carroll was a major developer during the boom years by way of such companies as Zoe Developments and Danninger.
He built a large number of apartment complexes around the Dublin area and elsewhere and is also known to be the owner of a substantial land bank.
Some reports have put his and his companies’ debts to his bankers at well in excess of €1 billion. His group has paused all development due to the slump in the market and is selling apartments to raise funds.
Mr Justice Kelly was told that Mr Carroll allegedly told former Irish Nationwide chief executive Michael Fingleton in late 2008 he could deal with €30 million of the guarantee in 2009 and had also confirmed that Allied Irish Bank and Bank of Scotland (Ireland) had the largest exposures arising from his developments.
A statement of affairs for Mr Carroll and his wife Roisín on October 31st, 2008 supplied to Irish Nationwide had shown assets of €259.5 million, bank debt of some €149 million, annual rental income of €9.85 million and annual interest of €7.9 million, the court was told.
The case by Irish Nationwide is against Mr Carroll and a company called Aifca Ltd, the directors of which include Laurence O’Mahony, Shrewsbury Road, Dublin, and Thomas McFeely, Ailesbury Road, Dublin.
Irish Nationwide claims Mr Carroll had executed an ‘‘irrevocable and unconditional’’ guarantee on September 29th, 2006 guaranteeing payment of all liabilities of Aifca to Irish Nationwide up to €60 million.
On the basis of that guarantee and subject to the terms of a commercial mortgage agreement, Irish Nationwide claims it granted and maintained a term loan facility to Aifca for €66.5 million and that some €78.6 million was now due and owing by Aifca under that facility.
It claims the facility allowed Aifca to refinance loan facilities previously provided to it by Bank of Scotland (Ireland) Ltd and was also to enable Aifca purchase the entire share capital of Lowe Taverns (Tallaght) Ltd.
Mr Justice Kelly fixed the case for hearing on July 17th next.