Business Irish

Wednesday 29 March 2017

Quinn family argues Anglo should be deprived of loan security

Tim Healy

They allege transactions were for illegally propping up share price

THE Quinn family is arguing that public policy requires Anglo Irish Bank to be deprived of security for €2.34bn in loans to companies in the Quinn Group, the Commercial Court heard yesterday.

Arguments by Mrs Patricia Quinn and her five adult children that Anglo was not entitled to recover the loans because they were allegedly made for the illegal purpose of propping up the bank's share price, miss the point of the purpose of EU market abuse regulations, Paul Gallagher, for the bank, said.

The family was completely ignoring the EU nature of the legislation, the public policy and legal requirements resulting from it, he said.

The measures could never have been intended to create doubt about ownership of shares or the market could not function, he said.

Counsel was speaking on the second day of the hearing, before Mr Justice Peter Charleton, of a preliminary issue in the case, aimed at avoiding liability for the loans.

The claim Anglo should be deprived of security for the €2.3bn loans would penalise most heavily the innocent shareholders of the bank, whose shares were alleged to be the subject of market manipulation, to their detriment, counsel argued.

Mr Gallagher said it was the family's own case that it was Sean Quinn Senior who was responsible for the investment strategy, and that none of the decisions taken in that regard were ever discussed with them.

Part of the bank's claim against Mrs Quinn and her children related to substantial sums of several hundred million, covered under share charges, which both pre-dated and post-dated the transactions alleged to constitute market manipulation, he said.

Some of the share charges were effected in 2003 and 2005, while others were entered into either immediately before or shortly after the nationalisation of Anglo (now Irish Bank Resolution Corporation), he said.

The family also sought to avoid being pursued under undated guarantees entered into as part of the tax planning structure for the benefit of the children, by which various Cypriot companies had purchased €108m shares in the bank.

Plea

There was no actual plea that the share charges themselves were illegal. The claim was that alleged illegality in the loan transactions tainted the share charges and guarantees, counsel said.

The bank was entitled to exercise its rights under the share charges to appoint a receiver and had done so without court intervention. It did not need a court order for that purpose.

The family claims the loans and security given in relation to them were for an illegal purpose -- to fund margin calls on contracts-for-difference positions taken out in Anglo by Mr Quinn Senior via a Madeira-registered company, Bazzely, so as to avoid the 2pc Quinn shareholding being made public and probably collapsing the bank.

They claim there would have been no loans without a desire to manipulate the market and that the bank was not entitled to appoint Kieran Wallace as a receiver over the shareholdings in Quinn companies last year.

Irish Independent

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