ANGLO Irish Bank gave loans to businessman Sean Quinn's wife and children to "manipulate" the bank's share price, the family has claimed in court proceedings.
Patricia Quinn and her children, Aoife, Colette, Brenda, Ciara and Sean Jr, say that €2.34bn in loans made by Anglo to various family companies are unenforcable because they were issued to support Anglo's share price.
The family of the Cavan-born tycoon says the loans -- made to various Quinn companies and Cypriot-registered companies -- were for an "illegal objective" of market manipulation of the bank's share price.
The claim is the single largest in the Commercial Court's seven-year history.
The family claims it is entitled to hundreds of millions of euro in damages as a result of the actions of the bank and alleges negligence, breach of duty and intentional and/or negligent infliction of economic damage by the now state-owned bank.
Anglo has hired former attorney general Paul Gallagher to defend the Quinn family's action.
The case, which is likely to be heard early next year, arises from events of the past two years that led to the family losing control of companies in the Quinn group.
Aoife Quinn has claimed, in a court statement, that the family signed personal guarantees in late 2008 over certain loans by Anglo to Cypriot-registered companies owned by the family without being told of the "precarious" financial position of Anglo.
The family had no independent legal or financial advice and the nature of the loan documents was never discussed with them, she said.
The lending by Anglo to various Quinn companies and to the Cypriot companies, whether directly or via other companies held by members of the Quinn family, "was in support of an illegal objective of market manipulation" prohibited by the relevant EU Directive on market abuse, she said.
The lending was "tainted with illegality, or was intended to support an illegal purpose, such that the said loans are not enforceable".
On those and other grounds, the family claim Anglo was not entitled last month to appoint Kieran Wallace as receiver over shares in several Quinn group companies.
While unable at this point to give the precise value of the damages claim, Ms Quinn said the consolidated gross sales of Quinn Group (ROI) Ltd was €2.116bn in the period to December 31, 2007, with profits of €453m, and the business was "a substantial going concern".
The net assets of that company were reported in its statutory accounts at some €753m in December 2007, she added.
Yesterday, Mr Justice Peter Kelly was told Anglo was consenting to the family's action being fast-tracked in the Commercial Court.
The judge noted none of the guarantees provided for the Anglo loans were dated and copy documents of two personal guarantees in the names of Aoife Quinn and Sean Quinn Jnr over certain loans by Anglo to companies registered in Cyprus were unsigned.
When he asked Mr Gallagher, for Anglo, whether the original guarantee documents were signed, Mr Gallagher said he understood the documents were in order but he would make inquiries.
Mr Gallagher added his side would consider whether to join Sean Quinn himself and others as third parties to the action.
Brian O'Moore, for the Quinns, said his side was contending various loans by Anglo to a number of Quinn companies and the Cypriot companies involved an unlawful support of the Anglo share price.
Ms Quinn also said, in her affidavit, the action was brought in the plaintiffs' capacity as owners of shares in several companies, including Slieve Russell Hotel Ltd; Quinn Quarries Ltd; Quinn Group (ROI) Ltd; Quinn Group Hotels Ltd; Quinn Finance Holding and Quinn Group Properties Ltd.
The family was claiming charges made in favour of Anglo from late 2003 up to 2009 over shares held in those Quinn companies were invalid, unenforcable and of no legal effect.
The family also wanted declarations that the undated guarantees provided by them to Anglo over the liabilities of several Cyprus-registered companies were invalid and unenforcable.
Those companies are Lud Investments Ltd; Moshaid Investments Ltd; Opawa Investments Ltd; Pahu Ltd; Tarate Enterprises Ltd and Morboneto Holdings Ltd, all with registered offices at Capital Centre, Nicosia.