Sunday 4 December 2016

Agreement reached between a number of Tony O'Reilly's creditors - court

Tom Healy

Published 21/05/2015 | 20:54

Dromoland castle
Dromoland castle

AGREEMENT has been reached between a number of businessman Tony O'Reilly's creditors over a bank's efforts to get a priority charge over €2.7m worth of shares held for him in the Dromoland Castle holding company, the Commercial Court heard.

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Following the agreement, the court made absolute a conditional order it granted last week giving AIB priority over Mr O'Reilly's other creditors in relation to the shares.

It is part of AIB's continuing efforts to recover a €22.6m judgment entered against him last June.   Inclusive of interest, and following the sale of certain assets, his total indebtedness to AIB stands at around €15.2m.

Dromoland Castle Holdings Ltd (DCHL), Newmarket-on-Fergus, Co Clare, and Wall Street investment institution BNY Mellon National Association, to which the shares are secured, were parties to the action.

The court previously heard that 8,216 shares, valued at €2.74m, in DCHL were secured to BNY Mellon.

Mr Justice Brian McGovern made the conditional order, granted last week, absolute following talks Thursday (May 21) between lawyers for AIB, BNY Mellon, DCHL and a representative of three financial institutions who say they are owed a combined €135m by the businessman.

Under the order, AIB and BNY Mellon agreed that €15.26m, plus continuing interest, stands charged in favour of AIB on the 8,216 shares held by or on behalf of Mr O'Reilly in DCHL.

It is subject to any prior interest of BNY Mellon has in those shares.

It is also without prejudice to any rights and entitlements of DCHL or it shareholders under the provisions of any shareholders agreement or the company's articles of association.

James Doherty BL, for AIB, said there were no objections to the conditional order now being made absolute. The original order sought was now being modified to protect any interests and assertions of other parties, he said.

Bernard Dunleavy SC, for Mr O'Reilly, said his client was not objecting to the order being made.

Rossa Fanning Bl, representing ACC, Lloyds Bank and US investment bank Lone Star - owed a total of €135m between them - sought an adjournment.

Counsel  said AIB, in seeking the charging order, had "rudely interrupted," and "put in jeopardy,"  an insolvency process Mr O'Reilly has underway in the Bahamas, where the businessman has a home.

Making that order absolute may have an effect on the Bahamian process, counsel said.

AIB rejected that claim and said it had concerns about the infirmity of the Bahamian process.

AIB was compelled to act in the interests of the taxpayer after it became aware last April of the businessman's interest in the 8,216 shares in DCHL, it was argued.

AIB sought the order after its representative was informed the businessman's proposal to enter a "composition with his creditors" under Bahamian law, similar to our personal insolvency arrangements.  It had concerns about that process.

He provided a statement of his assets and liabilities to AIB which said his debt to BNY Mellon was  around €6.2m. 

AIB said it had no knowledge of BNY Mellon's security interest in the DCHL shares. BNY Mellon holds a second ranking mortgage over Mr O'Reilly's Bahamian home, "Lissadell", Lyford Cay.

The net value of Lissadell is around €18.5m.

AIB said there appeared to be sufficient equity from the sale of the property for BNY Mellon to be fully repaid. 

There is also sufficient equity for the full repayment of €7.4m to EFG Bank & Trust (Bahamas) Ltd which has a first ranking charge over the property, AIB said.

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