Merrion Capital sues hotel developer to recover €12m loan
Stockbrokers Merrion Capital has launched a series of legal actions against Cork-based hotel and property developers Harte Holdings and its top executives, according to papers filed with the High Court in Dublin.
It's understood the case relates to a multimillion loan deal dating back to 2007, put together by Merrion for a syndicate of wealthy clients.
The action initiated at the High Court is to seek summary orders against the debtors -- the first legal stage in seeking to recover a loan.
Merrion put together a group of investors who advanced loans of up to €12m used by former dentist Barry Harte's global investment venture to finance the acquisition of the four-star Ramada Docklands hotel in London's Docklands district.
Papers filed with the High Court show the Merrion "nominees", as the syndicate is known, are now seeking summary judgment against Harte Holdings itself and a number of individuals, including chief executive and founder Barry Harte after the loans fell due unpaid.
A spokesman for Harte Holdings said last night that while there was a conflict with some investors, it was continuing to work with all parties in an effort to find a satisfactory solution.
Merrion Capital declined to comment when contacted yesterday.
The case dates back to 2007 when Merrion joined forces with Harte Holdings following its acquisition of the Ramada Hotel in a 50/50 joint venture between Harte and Lanos Holdings in December 2006.
Merrion put together a group of investors to provide so-called "mezzanine" loans to back the project, with the promise of a massive 13pc a year compound interest.
A glossy advertising circulated at the time said an investment of €100,000 would return €163,047 after four years, and €184,244 after five years, before tax.
Investors were wooed by the opportunity to invest in a hotel close to London City Airport and the ExCel Centre, the main sporting hub for the London Olympics.
Harte Holdings planned to sell the hotel with within three to five years, most likely in advance of the Olympics, to repay the debt.
It never happened, leaving investors empty handed when the mezzanine loans were due to be repaid.
It's understood that a sale of the London property would cover the loans advanced by the Irish investors, if a deal can be arranged.
No date has yet been set for a court hearing to decide the case and its understood the threat of legal action may be part of an effort to force a resolution of the issue by piling pressure on the borrower to press ahead with a sale.