Court rules £250,000 FitzPatrick loan does not have to be paid back
A £250,000 (€287,000) loan made in 2006 by the former Anglo Irish Bank to its now bankrupt former chairman Seán FitzPatrick for property investments in London does not have to be repaid into the bankrupt's estate by a former Anglo employee, the High Court has ruled.
Both Mr Fitzpatrick and former Anglo employee Mark Redmond had disputed claims by the court appointed official managing Mr Fitzpatrick's bankruptcy, the Official Assignee, that the money was repayable by Mr Redmond for the benefit of creditors of Mr Fitzpatrick.
In a judgment yesterday, Ms Justice Elizabeth Dunne said she accepted the "consistent" accounts of Mr Fitzpatrick and Mr Redmond related to the intention behind the £250,000 investment.
Mr FitzPatrick had told the judge he in late 2006 invested the £250,000 in the Woolgate Exchange office property to give “a chance of money” to Mr Redmond, then aged 24, “a bright young kid” from Tallaght who had joined Anglo in 2000 from school. Mr Redmond could have made thousands “or nothing, which is what it turned out to be”, Mr FitzPatrick said.
Both Mr FitzPatrick and Mr Redmond, whose tasks in Anglo included manging investments of Mr Fitzpatrick and his family, denied claims the £250,000 sum was a “loan” from Mr FitzPatrick to Mr Redmond repayable by Mr Redmond into Mr FitzPatrick’s estate following his adjudication as a bankrupt.
The High Court heard the £250,000 loan has been repaid to Anglo from some €10m in bank accounts held by Mr Fitzpatrick, adjudicated bankrupt in 2010 with estimated debts of €150m and assets of €47m, and his wife.
Today, the judge ruled, while some documents were consistent with existence of a loan and there was no doubt Mr Fitzpatrick drew the sum on a loan account using a cheque, the evidence was consistently that Mr Fitzpatrick was providing the €250,000 sum for a second investment in Woolgate, he was to get back that amount and Mr Redmond was to get the benefit of any uplift/profit.
She also accepted both men had intended, if the investment did not prosper, Mr Fitzpatrick was to take the consequences. While there was no doubt the provision of £250,000 by Mr Fitzpatrick was a loan, the "critical point" was the court accepted the arrangement was that Mr Redmond only had to repay if the investment realised more than £250,000, which it did not. That meant the "loan" was a limited or sole recourse loan.
The judge added she accepted there was "no real possibility" Mr Redmond could have invested in Woolgate through his own resources.
Mr Fitzpatrick had also made an investment in a property in Victoria, London and facilitated Mr Redmond in obtaining £100,000 from Ulster Bank so he too could invest in that, the judge said. Mr Fitzpatrick had guaranteed Mr Redmond's investment for €100,000. That property was expected to be sold for £70,000 and Mr Redmond had indicated he would make up any shortfall related to his share in the investment, the judge noted
Arising from a court examination last March of both men about the £250,000 sum, the Official Assignee Chris Lehane argued Mr Redmond was indebted to Mr FitzPatrick for some £285,000, including interest, arising from the Woolgate investment.
Mr FitzPatrick in November 2006 opened an account to fund the £250,000 Woolgate investment, which followed on from an earlier investment by him of some £1 million in the same property. Two loans were advanced by Anglo to Mr FitzPatrick for Woolgate, the first for £1 million and the second for £250,000.
Mr FitzPatrick and Mr Redmond were examined about the Woolgate and Victoria investments, both organised by property company D2 Private, as part of efforts to establish the extent of Mr FitzPatrick’s estate.