THE High Court has dismissed an action challenging the validity of receivers appointed over two well known West of Ireland Hotels.
Last May, Kieran Wallace and Barry Donohue of KPMG, were appointed as joint receivers and managers by Bank of Scotland over the assets of Diorama Ltd a company behind the TF Hotel and Theatre and nearby Harlequin Hotel in Castlebar Co Mayo.
However, the directors and shareholders of Diorama Patrick and Mary Jennings brought proceedings in the Commercial Court challenging the validity of the receivers appointment.
They claimed the receivers deed of appointment was invalid on grounds including that company was not in arrears at the time of the receivers appointment, or if it was in arrears it was due to the wrongful actions of Bank of Scotland. They further claimed that the appointment of the receivers was defective.
In his judgment today, Mr Justice Brian McGovern said the receivers were validly appointed and set aside the application to have them dismissed.
The Judge said that the deed of appointment of the receivers was valid and that he was quite satisfied the company was in arrears at the time of their receiver's appointment.
In December 2010 the company was in arrears, amounting to €883,000 on three loans. No instalments were paid by the company between December 2010 and May 2012, the Judge said.
In the circumstances the Bank was entitled to appoint receivers under the terms of an agreement entered into between the parties in 2005.
The Judge rejected the Jenning's claim that any arrears in Diorama's account at the time the receivers were appointed was done due to any wrongful action by Bank of Scotland.
The Judge said he was further satisfied that the bank was entitled to set off monies taken from bank accounts of the Jenning's other companies against one of the loans taken out by Diorama Ltd. Bank of Scotland was entitled to do this on the basis of the terms and conditions of the loan.