Businessman sues advisers after losing heavily on €17.5m hotel
A BUSINESSMAN has sued his financial advisers over what he claims was disastrous advice to buy the Chief O'Neill hotel and property complex in Smithfield, Dublin, for €17.5m.
Laurence Byrne claims he had assets of more than €19m prior to buying the complex on the advice of BDO, formerly BDO Simpson Xavier.
But, he said, he suffered total losses of some €14m and was being actively pursued by banks for €10.7m.
The investment was risky, was actively managed by BDO and required Mr Byrne to take on debt of €14.8m and inject equity of €3.7m, representing more than his net worth, it is claimed. Had correct advice been given, he would not have entered it, it is also alleged.
At a meeting in November 2011 with Peter Carroll of BDO, Mr Byrne said he had told Mr Carroll he considered him responsible for "the disaster that I had lived with for five years, which has caused me untold stress and has resulted in my suffering a brain haemorrhage in 2006 and a stroke".
In an affidavit, Mr Byrne (50), a father of two from Mount Wolseley House, Tullow, Co Carlow, said BDO recommended in 2005 he invest in the complex consisting of the Chief O'Neill hotel, Ceol Music Shop, Jameson Observation Tower and the Water Tank Office Building.
Due to poor performance of the hotel, he later had no option but to sell the complex and it was ultimately sold for €8.5m in October 2009, he said.
He had since learned the defendants were previously involved in the complex, Mr Byrne said. At the time he was approached to purchase it, he understood BDO was continuing to act for the consortium that had acquired the complex and leased it back to the developers.
His purchase of a put and call option meant BDO was receiving a commission and/or reward from an interested third party but that was not disclosed to him at the time, he said.
The case against BDO, Mercer Street Lower, Dublin, was transferred to the Commercial Court list yesterday by Mr Justice Peter Kelly on the application of Denis McDonald, for Mr Byrne, and on consent of BDO.
Mr Byrne said he was not warned the funding of the investment was conditional on it achieving projections prepared by BDO or of the dangers if planning permission was not secured. That permission was refused but he only learned that days after signing the contracts in November 2005.