Anglo must declare whether it was solvent in 2009
AN official of the former Anglo Irish Bank must swear a "yes or no answer" as to whether the bank was solvent in 2009 when it allegedly gave €88m in loans to a developer, a judge said today.
A solicitor for developer Kevin McNulty had sought court orders requiring that all documents be disclosed, or "discovered", relating to Anglo's solvency after September 2008 as part of his client's defence to proceedings brought against him by a NAMA company which took over the Anglo loans.
One of the "fundamental defences" being advanced by Mr McNulty and his companies was that Anglo, which was nationalised in January 2009, was insolvent when it purported to make the alleged loans, solicitor John Larney said in an affidavit to the Commercial Court.
While there was "a wealth of evidence in the public arena" suggesting the bank was insolvent since 2008, such material woud not constitute the proof required by a court and that was why discovery was being sought, Mr Larney said.
Mark Sanfey SC, for NAMA, opposed discovery relating to Anglo's solvency, saying it was not relevant to the issues to be decided in the case. The loan facilities at issue were increased, extended and refinanced between 2000 and 2009, he added.
r Justice Peter Kelly said, while the courts have found Irish law does not provide for a cause of action for reckless lending, this case involved claims that loans were advanced negligently.
He considered the issue as to Anglo's solvency was relevant but that matter was best addressed by an Anglo official providing a sworn "simple Yes or No" answer to the question whether Anglo was solvent in 2009, rather than the extensive discovery sought, he said.
The judge made several other orders relating to the nature of documents to be provided for the proceedings and adjourned the case for trial in June.
The NAMA company, National Assets Loans Management Ltd (NALM) had initiated proceedings last year against Mr McNulty and others.
Last April, when applying to have the case fast-tracked in the Commercial Court, lawyers for NALM said there were issues concerning "grave irregularities" in the security provided for some of the Anglo loans and other issues about certain asset transfers to Mr McNulty's wife Jessica.
The action is against Mr McNulty, Red Bog, Blessington, Co Wicklow, two of his companies - Ashburton Construction Ltd, and P.A. Bello Ltd, both with registered offices at Clondalkin, Dublin.
The claim relates to a 2009 facilities agreement provided by Anglo and to personal guarantees allegedly provided by Mr McNulty in 1998 and
2003 over the liabilities of the two companies.
e case is also against Conal P Byrne, Castlepark, Mill Road, Leixlip, Co Kildare, who is being pursued for €4.1m arising from a personal guarantee allegedly provided by him in 1998 concerning liabilities of Ashburton. Mr Byrne denies liability and claims he was "sidelined" from the affairs of Ashburton.
NAMA informed Mr McNulty in February 2011 it had acquired his liabilities from Anglo but that bank would continue to administer those. Anglo had carried out the required legal due diligence associated with assets acquired by NAMA during which "grave irregularities" were uncovered related to the security proffered to, and relied upon, by Anglo, it said.
Letters of demand were served on Mr McNulty and the other defendants in February 2012.