Monday 23 October 2017

IBRC want to stop Quinn family litigation

A RENEWED bid has been made to prevent members of bankrupt businessman Sean Quinn's family litigating claims that the former Anglo Irish Bank unlawfully "shovelled" €2.34bn loans into Quinn companies.

The special liquidators of Irish Bank Resolution Corporation (IBRC), formerly Anglo, want the Supreme Court to overturn a High Court decision permitting Patricia Quinn and her five children to litigate claims Anglo advanced the loans for the unlawful purpose of propping up its share price.


They claim Anglo illegally made loans from September 2007 to fund margin calls on contract for difference (CFDs) positions - which requires a seller to pay to a buyer the difference between the current value of an asset and its value at contract time.


The CFDs were built up by Sean Quinn senior in Anglo from 2005 through a Madeira-registered company, Bazzely, owned by the Quinn children.


The High Court also ruled the Quinns may litigate additional claims the loans breached the Market Abuse Regulations.


IBRC had argued the Quinns should not be allowed make those claims in their action denying liability for the €2.34bn loans.  But Mr Justice Peter Charleton, in February 2012, said it would be contrary to public policy to shut out the Quinns from responding to the "flagrant illegality" alleged against Anglo and Sean Quinn.


He ruled the family are entitled to advance claims they can avoid liability for loans if they prove those loans were made for "wholesale" market manipulation in breach of Irish and European law.


He added there may be a portion of "legitimate debt" involved, a reference to the bank's claim that €500m loans are unrelated to the allegedly unlawful loans.  That could result in a proper apportionment of legitimate and illegitimate debt at the end of this case if the Quinns proved their claims, he noted.


He rejected the bank's claims the EC 2003 Market Abuse Directive and other laws "ring-fenced" matters to the extent the courts cannot prevent enforcement of an illegal contract.


The illegality defence rests ultimately on principles of public policy that courts will not assist a plaintiff guilty of illegal or grossly immoral conduct of which the courts should take notice, he said.


The bank had argued, if the family proved the loans were issued in breach of Market Abuse Regulations 2005 and the ban in Section 60 of the Companies Act on a company providing financial assistance to buy its own shares, the loans must stand with the family's only remedy being statutory penalties including a maximum €10m fine and/or 10 year jail term.


Allowing a share transaction to be unwound would "cause chaos" in the marketplace, it argued.


Today, the IBRC special liquidators argued it is entitled to have its appeal against the High Court's ruling heard as a preliminary issue in advance of the full hearing of the family's action. The Quinns contend the Supreme Court should not hear any such appeal until the main action is heard and determined.


At the request of the Director of Public Prosecutions, the main action has been deferred pending the hearing of criminal proceedings against former Anglo Chairman Sean Fitzpatrick and other former senior executives of the bank.


Mr Justice Peter Kelly previously directed there should be a hearing before the Supreme Court on the discrete issue concering whether the bank is entitled to have its appeal determined before the full action.


A three judge Supreme Court yesterday heard arguments on that issue and said it would deliver its ruling at a later date.

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