Accountant worth €10m is 'refusing to pay' Anglo debt
Judge denies admission to Commercial Court and criticises lender for failing to create security for €650,000 loan
Published 07/12/2010 | 05:00
ANGLO Irish Bank has claimed that a chartered accountant with an estimated net worth last June of some €10m can -- but won't -- pay a debt to it of €650,000.
After the Commercial Court heard yesterday that Anglo has no security in place for its loans to Bryan Phelan, Mr Justice Peter Kelly remarked: "More fool the bank for lending with no security."
Anglo has brought proceedings against Mr Phelan, of Ardilea Wood, Ardilea, Dublin 14, and carrying on business at Orchard House, Clonskeagh Square, Dublin 4, seeking to recover sums of €525,884 and £97,107 (€114,670), plus interest, under a loan facility of 2006.
The bank claimed it has been, since January 2008, in constant correspondence with Mr Phelan seeking payment of arrears and proper service of the sums due under the facilities.
It also said that while a facility letter referred to security, it was ultimately not possible to create the legal charge described in the letter and therefore the bank has no security for the loan.
Mr Phelan had indicated that the proceeds of a property transaction in Lanzarote would allow him to meet his loan obligations, Anglo said.
He also, in February 2010, sent two cheques to Anglo to go towards repayment but asked it not to lodge them and rather hold them for a period and later said there were no funds in his account to honour the cheques, the bank said.
Mr Phelan had last September, at Anglo's request, sent the bank a statement indicating that his net worth as assessed by him at June 30 last stood at almost €10m. Despite the various assurances given by Mr Phelan in relation to clearing interest arrears and payment of capital, none of those led to repayment, the bank said.
In October last, the bank demanded immediate payment of sums due and owing.
Counsel for Anglo agreed with Mr Justice Kelly yesterday that the bank believes Mr Phelan can, but won't, pay the debt. She also argued there was no undue delay by the bank in pursuing the debt as Mr Phelan had constantly assured the bank it would be repaid
Aidan Redmond, for Mr Phelan, opposed the case being transferred to the Commercial Court on grounds that the sum involved fell below the €1m threshold of that court and the bank had failed to show any special circumstances justifying transfer.
There was extraordinary delay by the bank in advancing its claim and it had no security over the loans since 2006, counsel added.
Mr Justice Kelly said the bank believed it had been "led along" by Mr Phelan. The bank foolishly lent money with no security and Mr Phelan had persuaded it over a long period not to move against him, he noted.
Because the amount due was under the €1m threshold for admission, and the bank had failed to show any special circumstances justifying the case being fast-tracked, he would not admit it to the Commercial Court, he said. The case will now proceed at a slower pace in the ordinary High Court list.
In a separate action, the High Court has made an order winding up a firm which is part of the Hanly group of construction and quarry-operating companies.
Mr Justice Roderick Murphy made an order confirming the appointment of Tom Kavanagh, of Kavanagh Farrell, as liquidator to Hanly Brothers Ltd, which operates a quarry in Elphin, Co Roscommon, and employs 45 people.