Retail park owners suing bank over €54m loan swaps
THE owners of a retail park have sued a bank over the alleged mis-selling of loan swaps totalling almost €54m.
Mr Justice Peter Kelly yesterday agreed to fast-track in the Commercial Court the action by Komady Ltd and Michael O'Reilly, owners of Belgard Retail Park, Belgard Road, against Ulster Bank.
The case comes back before the court in May.
In their action, solicitors for Komady and Mr O'Reilly outlined that the case relates to four loan facilities concerning the financing and indebtedness advanced for Belgard Retail Park in Dublin. The park continues to be successful, they said.
The case relates to two facilities made between Komady and Ulster Bank, one dated June 2005 for €24.5m and the second dated June 2006 for €2.5m.
It also concerns two facilities made between the bank and Mr O'Reilly, one dated September 2005 for €24.4m and one dated June 2006 for €2.5m.
It is claimed the Belgard loan agreements were a result of the refinancing of older liabilities as the historic development of the retail park was previously financed by Anglo Irish Bank.
It is alleged, after the Belgard loan agreements were executed, the bank or its servants or agents advised the retail park owners to enter into the derivative agreements, or swaps as they are known.
It is claimed a large portion of the liability represented by the agreements was subject to a hedging arrangement to take account of any increase in interest rates over and above 5pc for a significant period of time.
It is claimed the Code of Conduct for Investment Business under the Central Bank Act applies to the instruments but, it is alleged, the provisions of the code were not adhered to in relation to execution of the swaps or in relation to the advice received concerning them.
It is alleged the agreements were not consistent with the best interests of the retail park owners and were not properly explained to them.
The "calamitous effects" of breaking out of the instruments were never explained and nor was it explained that break benefits would accrue in certain circumstances, it is alleged.