Thursday 27 October 2016

Court rules that Wallace must pay €2m to US vulture fund

Tim Healy and Shane Phelan

Published 30/01/2016 | 02:30

Mick Wallace. Photo: Tom Burke
Mick Wallace. Photo: Tom Burke

Independent TD Mick Wallace is faced with having to pay €2m to a US vulture fund he raised concerns about in the Dáil.

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A judgment for €2m was granted against Mr Wallace over his guarantee of a loan given by Ulster Bank to a company of his.

The loan has since been bought by US vulture fund Cerberus.

A three-month stay applies on execution of the judgment.

At the Commercial Court, Mr Justice Brian McGovern ruled the fund which took over the Ulster Bank loan, Promontoria (Aran) Ltd, the Irish subsidiary of US fund Cerberus, was entitled to summary judgment.

He said Mr Wallace had raised no arguable defence to the fund's claim.

Mr Wallace was one of the fiercest critics of Cerberus's purchase of Nama's Project Eagle Northern Ireland loan book for €1.6bn in April of 2014.

Claims of political kickbacks on the margins of that purchase are being investigated by the UK's National Crime Agency (NCA), the US Securities and Exchange Commission and a Stormont committee.

Mr Wallace had also opposed the sale of another Nama asset portfolio, known as Project Arrow, to Cerberus for around €800m, calling on Finance Minister Michael Noonan to suspend the sale until the NCA investigation was complete.

Yesterday, Mr Justice McGovern entered judgment for €2m, the maximum amount of Mr Wallace's liability under his guarantee of a €2.1m loan made to his company, M & J Wallace Ltd, and also awarded costs against the TD.

The three-month stay on execution of the judgment is to allow for the effect of an expected sale of a restaurant property at Dublin's Ormond Quay on Mr Wallace's indebtedness.

Earlier, Stephen Walsh, for Mr Wallace, sought a stay of some three or four months on grounds of Mr Wallace's personal circumstances. The stay application was a plea for "the type of practical and sensible justice" operating in the courts, counsel said.

Mr Walsh said ACC Bank has had a €20m judgment against Mr Wallace for four years and made "modest" recovery from that.

If Promontoria thought it would "leapfrog" over ACC and "snaffle" some asset, it was "naïve in the extreme" as there was "nothing" there to execute the judgment against, he said.

An application to wind up M & J Wallace, founded in 1970 by Mr Wallace's father, was for hearing on February 15, counsel said. Mr Wallace had to direct his attention to that matter which had emotional significance for him.

Mr Wallace will also be seeking re-election in the forthcoming General Election, expected to be held on February 26, counsel said.

Mr Wallace may be "jockeying" in post-election negotiations and would be very busy up to and after February 26, he added.

Counsel agreed with the judge the TD had to be re-elected first.

Mr Walsh said the best ground for a stay was because the expected sale of a restaurant property - the Taverna di Baccio, on Ormond Quay, - on which the fund held security, would reduce Mr Wallace's overall indebtedness.

Paul Gardiner, counsel for the fund, said this was a "very unusual" stay application and Mr Wallace had effectively already had a stay for three months. The debt of the Wallace company will be reduced below €2m by the property sale but the sale would not extinguish the debt, he said.

The other arguments amounted to saying Mr Wallace was "too busy" to deal with this matter and were not reasons for a stay, counsel said.

The TD would suffer no prejudice by entry of the judgment because he seemed to be saying he was not paying either ACC or Promontoria, counsel said.

Mr Wallace was not in court for the ruling on the judgment application.

He had contended he had an arguable defence entitling him to a full plenary hearing on grounds including the fund was not validly assigned the €2.1m loan advanced in 2009 by UIster Bank to M & J Wallace.

Irish Independent

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