Don't bank on Anglo recovering cash any time soon
THE first step has been taken by Anglo Irish Bank against Sean FitzPatrick, the former chairman, but it won't be easy for the bank to recover the €70m in loans believed to be outstanding.
Mr FitzPatrick has been telling the bank he cannot pay the loans at this time, even though he has reduced his debt to them over the past year.
Mr FitzPatrick was worth €90m at the height of the boom in 2007, but the nationalisation of Anglo in January 2009 wiped out a huge portion of his accumulated wealth. Mr FitzPatrick also owned shares in other Irish banks and they've also been reduced to near worthless amid the financial crisis.
It is understood Mr FitzPatrick has shares in various partnerships, mainly property. But getting out of these with any cash is very difficult and most of them are in negative equity. There is also an investment in a casino in Macau, but it is understood this has been sold already.
The other major asset is a stake in the Ekeh oil field in Nigeria, but this has not gone into production yet so there is no revenue stream from the asset at this point.
But there may be some way for the bank to assume FitzPatrick's share in this project.
The other asset owned by Mr FitzPatrick is his home in Greystones which he owns with his wife. Legal experts last night told the Irish Independent that Anglo can take out a judgment against Mr FitzPatrick's 50pc stake in this home, but there is virtually no chance of them getting possession of the property while the FitzPatrick family is living there.
Ulster Bank also has a claim over this home, according to land registry records, so it is far from clear whether Anglo will have the primary entitlement to a share in this property.
Either way it appears on the surface that Anglo is going to have severe difficulties getting the €70m owed by FitzPatrick back, unless there is a dramatic improvement in the Irish property market.
Anglo knows this already as FitzPatrick has furnished it with a list of his assets and liabilities.
Mr FitzPatrick, according to friends, is effectively broke, at least in terms of liquid assets he can realise at present.
A deadline for him to repay the €70m was breached on Wednesday and it appears Anglo has run out of patience and is no longer prepared to wait for FitzPatrick to lay his hands on fresh funds.
Equally the bank has to be seen to be taking steps to get the money back, but it's not clear whether there is any real chance of this happening.
Some legal sources last night described the lodging of a summons as a 'PR stunt' to show the bank is serious about pursuing FitzPatrick.
Only time will tell whether this judgment is fair or not.
The Government, meanwhile, was privately breathing a sigh of relief last night over the turn of events.
For months, Finance Minister Brian Lenihan has been taking political flak over the issue of the Sean FitzPatrick loans and over the length of time that it is taking to bring prosecutions against anyone who worked at the bank.
It was no surprise then that Mr Lenihan last night said he welcomed the actions taken by the bank.