Monday 23 April 2018

Misunderstanding of Lynch loan terms baffles expert

Tim Healy

Former AIB banker Tom Barry was "sceptical" how anyone could have concluded the final terms of a €25m loan to businessman Philip Lynch, his family and developer Gerry Conlan, did not involve full recourse to all borrowers, the Commercial Court heard.

Mr Barry said most business lending by AIB, even at the height of the property bubble, was recourse lending. He told the court he didn't believe AIB would contemplate a non-recourse loan for development land.

The final AIB loan letter signed by the Lynchs and Mr Conlan on February 8, 2007 was a full recourse loan, he said. He would be "amazed" that a solicitor would think it was non-recourse and believed no person with business experience could conclude that.

However, because an earlier draft loan letter included a condition stating AIB had recourse to Mr Lynch and Mr Conlan, that created potential for confusion, he said.

It would have been prudent for AIB, when deciding to remove that condition in its final loan letter, to have acted on legal advice from its solicitors to make clear the final letter involved full recourse to all borrowers, he said. If that had beendone, there would have been "no confusion", he agreed.

Earlier, solicitor Laurence Shields, founder of the LK Shields firm, said he was not personally involved in events in 2006 and 2007 leading up to signing of the €25m loan.

He agreed that an email sent by a solicitor with LK Shields to the Lynchs on February 8, 2007, stated the loan involved no legal recourse to the Lynch family and Mr Conlan.

He denied, when the Lynch family had contacts with his firm in 2009 about the loan, that his firm had a conflict of interest.

The case resumes on May 3.

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