Tuesday 25 September 2018

Bank seeks €22m back from brothers in data centre bid

Ulster Bank said money was loaned to buy Wicklow site
Ulster Bank said money was loaned to buy Wicklow site

Tim Healy

ULSTER Bank is seeking judgment for €22m against three brothers over unpaid loans given to them to buy an 80-acre site in Wicklow where it was proposed to develop a data centre.

Ulster Bank also says the brothers sought to deceive it by using a company which the bank described as "a front" for one of the brothers to buy the land for just €1.5m and where the original loan for the property was €21.5m.

The bank and two receivers it appointed over the land at Kilpedder are suing Brian McDonagh, Dromin House, Dromin East, Delgany, Co Wicklow, Kenneth McDonagh and Maurice McDonagh, both of Charleston Road, Ranelagh, Dublin. They seek judgment for €22m as well as declarations that the brothers were in breach of a 2014 agreement to deal with their debt.

It arose out of a 2007 loan for €21.8m to the brothers to buy the Kilpedder site. Planning permission was obtained for a data centre on the property but ultimately it did not proceed.

The case was admitted to the Commercial Court yesterday by Mr Justice Robert Haughton on consent between the parties.

In an affidavit, Ulster Bank relationship manager Brian Conlan, says that under a 2014 agreement to deal with their debt, the McDonaghs were to sell the land by the end of July 2014.

They failed to do so but instead purportedly entered into an agreement to sell the land for €1.5m to a company called Granja Ltd without the knowledge of the bank and in breach of the 2014 settlement agreement, Mr Conlan said.

Granja brought High Court proceedings in 2014 claiming the bank failed to specifically perform an agreement between them.

Five days into the hearing of that case, it was discontinued.

Mr Conlan says it became clear in those proceedings, during cross-examination of the principal witness for Granja, that it was "in fact 'a front' for Brian McDonagh" for the purpose of acquiring the land without the knowledge of the bank and therefore writing off all outstanding debt.

Mr Conlan says while the McDonaghs are likely to contend they were not in default of their loan in accordance with the 2014 agreement with the bank, this is not the case.

The defendants failed to sell the land as was agreed and instead sought to "deceive the bank through using Granja as a device for their own gain to reclaim the land and avoid their liability under the (loan) facility". Mr Conlan also says they failed to openly market the property following the agreement and that Brian McDonagh failed to provide the bank with a charge over a holiday home he has in Portugal.

It is also claimed that the brothers are engaged in an attempt to further delay and frustrate the sale of the land by the receivers.

Cattle have been put on the land, a "for sale" sign was burnt down and "no trespass/private land" signs had been removed, Mr Conlan said.

It is understood the brothers are expected to contest the debt action.

Irish Independent

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