Lynch has gone to war with AIB over failed property deal
Published 04/12/2010 | 05:00
BUSINESSMAN Philip Lynch is used to tough battles and seems determined to use all of his firepower against AIB and his solicitors to ensure his family doesn't have to hand over more than €10m to the bank as a result of a failed property investment.
Mr Lynch, who is the chief executive of the One51 group and the former chief of the IAWS Group, recently made headlines when he stepped down as chairman of the national paediatric hospital following a disagreement with Health Minister Mary Harney.
Essentially Mr Lynch, wife Eileen, children Therese, Philippa and Paul together with Judith Whelan and another investor Gerard Conlan, borrowed €25.3m in 2007 to purchase and develop an 86- acre site at Kilbarry in Waterford.
They intended to apply for planning permission and build a retail and housing development there. The collapse of the property market has put paid to that and now AIB wants the loan repaid.
This court battle was prompted by AIB's decision to do this by securing judgments against each of them to make them personally liable to repay the loan.
The Lynch family investment is believed to have accounted for 50pc of the transaction, and each family member has a sixth of that portion of the investment.
Mr Lynch and his family are countersuing the bank. They say the loan agreement was to the effect that the money was being loaned on a "non-recourse" basis, meaning the site in Kilbarry was to be the only security put up against the loan.
If things went wrong the bank could take the site back and sell it to repay the loan.
From what we now know about the state of our banks, such non-recourse lending was common, and has lumbered Irish financial institutions with colossal debts.
In this case though, AIB claims this wasn't the agreement it had entered into and that it is entitled to recover this debt.
Significantly the Lynch family is also taking proceedings against two firms of solicitors, Matheson Ormsby Prentice and LK Shields, challenging written legal advice given about the loans.
The bank and the solicitors are expected to vigorously defend the case.