Tuesday 25 October 2016

AIB gets charge over Tony O'Reilly's Dromoland Castle shares worth €2.7m

Published 12/05/2015 | 16:51

Anthony O’Reilly and his wife Chryss Goulandris
Anthony O’Reilly and his wife Chryss Goulandris

AIB has obtained a conditional court order giving the bank a charge over €2.7m worth of shares held by, or on behalf of, businessman Tony O'Reilly in the Dromoland Castle holding company.

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The order is aimed at giving the bank priority over Mr O'Reilly's other creditors in relation to the shares in 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 €15.2m.

Mr Justice Brian McGovern granted AIB the order following an ex-parte (one-side only represented) application made by its lawyers in the Commercial Court Tuesday (May 12).

He also granted liberty to the bank to notify Dromoland Castle Holdings Ltd (DCHL), Newmarket-on-Fergus, Co Clare, of the making of the order.

He further granted it liberty to notify the making of the order to  Wall Street investment institution BNY Mellon National Association to which the shares are secured.

The judge made the case returnable to next week.

In an affidavit, AIB manager Bernard Carroll says Mr O'Reilly, who has a home in the Bahamas, told the bank on April 20 of a proposal to enter a "composition with his creditors under Bahamian law" (similar to personal insolvency arrangements here).

Mr O'Reilly provided a statement of his assets and liabilities  saying 8,216 shares in DCHL were secured to BNY Mellon and were valued at €2.74m, based on an indicative offer, Mr Carroll says.

The statement also said Mr O'Reilly's debt to BNY Mellon stood at  around €6.2m.   AIB has no knowledge of BNY Mellon's security interest in the DCHL shares, Mr Carroll says.

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 and Mr Carroll says it appears there exists 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 (Bahmas) Ltd which has a first ranking charge over the property.

If BNY Mellon looked to the Bahamian property, along with a €227,000 investment fund it also has recourse to, it would not need to rely on its security interest in the DCHL shares, Mr Carroll says.

AIB has also objected as to the jurisdiction and as to the correct procedure used by Mr O'Reilly to commence a composition with creditors under Bahamian law, he says.

AIB believes the proposed composition is "procedurally flawed"  under Bahamian law as Mr O'Reilly failed to petition the Bahamian Courts in advance of holding a creditors meeting which took place in London on April 30.

AIB attended that meeting, which was chaired by Mr O'Reilly's representative Bernard Somers, but not attended by the businessman himself as he was under doctor's orders not to travel.  

Mr Carroll says AIB voted against the proposed composition although it was passed by a majority of creditors.

A further meeting is scheduled for London this Thursday (May 14) at which, Mr Carroll believes, it is intended to register last month's creditors' meeting resolutions and confirm the composition with creditors by trust deed.

Mr Carroll says it appears from the minutes of the April meeting that Mr O'Reilly's assets would be protected from creditors after registration of the resolutions in the Bahamas.

As AIB maintains the composition with creditors is procedurally flawed, the bank remains free to execute against any of Mr O'Reilly assets and it is doubtful if any execution could be overturned in a subsequent validly convened composition, Mr Carroll says.

Even if the Bahamian procedure has been validly invoked, the composition only takes effect on registration in the Bahamas of last month's resolutions, he adds.

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