Sunday 26 March 2017

Upholding Quinns' loan claims would cause havoc, warns Anglo

Tim Healy and Laura Noonan

INTERNATIONAL markets will be plunged into "drastic uncertainty" if a court rules that €2.3bn of loans linked to Quinn Group companies are unenforcable, the former Anglo Irish Bank told the High Court yesterday.

The claim came as the bank insisted that the court should not accept Sean Quinn's family's claims that the loans to Quinn companies are unenforcable because they were made for the illegal objective of supporting Anglo's share price. Mr Quinn's five children and his wife, Patricia, are asking the court for standing to bring a full case arguing that some €2.34bn of loans are unenforcable and should not have been used by Anglo as the basis for seizing control of the Quinn Group and a €500m international property portfolio.

The Quinns are arguing that the bank breached market-manipulation legislation by lending the monies for the sole purpose of keeping up its own share price by ensuring that Mr Quinn did not offload a 29pc interest in the bank.

Yesterday, Anglo's senior counsel, Paul Gallagher, argued that there was no express provision under EU and Irish law for such transactions to be declared unenforcable and the Irish courts should not imply a private right of action to avoid loan transactions affected by market manipulation.

Penalising

The law against market manipulation was not aimed at the financial instrument or loan at issue but rather at penalising those people who sought to manipulate the market, he said.

Any move by the Irish courts to invalidate the loans would lead to uncertainty in the markets, cause "havoc" in international property transactions, and deprive the bank of the right to recover €2.3bn of its property, the bank contends. It was not open to Ireland, on the basis of public policy, to create an additional sanction incompatible with EU policy.

Mr Gallagher, with Brian Murray, for Anglo, made final arguments for the bank yesterday before Mr Justice Peter Charleton.

The judge must decide whether the family has the necessary legal standing to allege breaches of the Market Abuse Regulations 2005 and Section 60 of the Companies Act 1963 in support of claims that guarantees and share pledges provided by them, on foot of which the bank seeks to recover the loans and has appointed a receiver, are unenforcable due to alleged illegality.

The family claim the loans are unenforcable because they were allegedly knowingly made by the bank to unlawfully fund Contract for Difference (CfD) positions in Anglo to support its falling share price.

The bank insists the family is liable under various guarantees and share pledges provided by them on dates from 2003 to 2009. It also argues some €500m loans are unrelated to the alleged CfD loans.

The hearing resumes today. Mr Justice Charleton is expected to reserve his decision.

Irish Independent

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