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Friday 29 August 2014

Former billionaire Anthony O’Reilly loses bid to postpone AIB moving in on assets

Move could have ‘potentially enormous’ consequences for businessman

Dearbhail McDonald

Published 27/06/2014 | 12:41

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Anthony O’Reilly
Anthony O’Reilly

Former billionaire Anthony O'Reilly has lost a bid to postpone AIB Bank moving on his unencumbered assets in a ruling that could have "potentially enormous" consequences for the businessman.

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Last Monday AIB secured a €22.6m judgment against Mr O'Reilly - and claimed the businessman is insolvent.

Mr O'Reilly (78) sought what he described as as a "limited" six-month court delay on the registration and execution of the judgment - as it relates to his unencumbered assets - as he wants to sell them in an orderly fashion.

Such a stay or postponement would have prevented a series of court actions by other creditors, a move which could lower the value of those assets.

Mr O'Reilly's legal team argued that if a stay was not granted, the consequences for him and two of his companies are “potentially enormous”.

High Court judge Mr Justice Peter Kelly said he wanted time to consider the delay bid and said would give his judgment today.

He granted a stay until this afternoon when he ruled, in an extensive written judgment, that he has refused Mr O'Reilly's request for a six month stay.

Judge Kelly, who heard that Mr O'Reilly may consider a Supreme Court appeal against his ruling, also refused a short stay - until next Tuesday - against the registration and execution of the debt as even a short stay could prejudice AIB.

AIB, which has not appointed a receiver over Mr O'Reilly's Castlemartin Stud and Estate in County Kildare, could now move against Mr O'Reilly's unencumbered assets, triggering other banks and institutional creditors to do the same.

Mr O'Reilly feared a "hasty rush to judgment" by his other banks who had agreed to forbear on his debts to facilitate an orderly and structured sale of his unencumbered assets.

But they could now break ranks and pursue his assets in locations such as the Bahamas and the British Virgin Islands following today's ruling.

The one time billionaire admits he owes almost €200m to his creditors and stated in court papers that the AIB judgment is just under 12pc of his overall personal liabilities.

Mr O'Reilly did not dispute the AIB debt and Judge Kelly stated last Monday that he "deserved credit" for accepting from the outset the monies were repayable.

But Judge Kelly refused his application for a stay.

Mr O'Reilly's  lawyers argued that he "is hopeful" that the sale of his Castlemartin Estate in Co Kildare – described as "the jewel in the crown" – would discharge most or all of the debt owed to the state-owned lender.

Last Monday judgment for some €23m in total was also entered against two of Mr O'Reily's  investment vehicles.

Judge Kelly was told by AIB that all three defendants “are insolvent”.

Mr O’Reilly hoped the assets sale, including of his 750-acre Castlemartin Estate and shares in Independent Newspapers, will discharge most or all of the debt owed to AIB.

The Commercial Court has heard that Castlemartin  is the key to his ability Mr O'Reilly's ability to pay off the AIB debt.

Mr O'Reilly previously told AIB he would sell the church and graveyard on his Castlemartin Estate where his parents and two grandchildren are buried to meet his debts to AIB, which had not taken security of the burial ground.

Mr O'Reilly had agreed with other creditors, owed some €195m, they would not move against him so as to facilitate sale of assets with the proceeds of sale to be distributed equally on a pro-rata or proportionate amongst his creditors.

It was argued that AIB would not suffer prejudice if a stay was granted subject to certain undertakings from his clients.

And his legal team said that AIB would do better to allow the sale of Castlemartin and other assets proceed in an orderly way. 

AIB opposed any stay and  said a stay could not be justified by "expressions of hope" the sales would clear the bank’s debt.

AIB brought the proceedings against Mr O'Reilly, Lissadell, Lyfordf Cay, Nassau, Bahamas; and for €18.6m and €4.1m against two of his investment vehicles, Indexia Holdings and Brookside Investments Ltd, after expressing dissatisfaction with proposals to clear those debts.

Brookside owns his estate in Glandore, Co Cork, while Indexia holds his near 5pc stake in Independent News & Media (INM) and share of Providence Resources.

Despite lengthy negotiations from 2010, the defendants failed to make any substantial commitment to repay those facilities and Mr O'Reilly's representative Bernard Somers had said on May 14 that €2m cash was not available to meet AIB’s demand to make an upfront payment in partial reduction of the debt, the bank claimed.

The proceedings arise from loans made to Mr O’Reilly on dates from March 2009 to fund personal investments, repay a director’s loan and refinance an existing loan.

The loans were repayable on dates in 2010 and 2012.

Security for the loans included mortgages over the Gate Lodge and Caretakers Lodge at Castlemartin Stud; 240 acres at Castlemartin and Corbally, Kilcullen, Co Kildare; Hill House, Holy Cross and adjoining lands at Glandore, Co Cork; Shorecliffe House and lands at Glandore; and share mortgages over shares in INM.

ENDS

 

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