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AIB threw cash at me -- developer who owes €20m

A DEVELOPER being sued for €20m in unpaid loans says a bank abandoned basic principles of credit risk in "throwing" large sums of money at him.

Gerard O'Rourke -- who owes €20.7m to Allied Irish Banks -- says the bank aggressively courted his business and did not seek independent land valuations or conduct due-diligence exercises.



UPHILL

AIB had brought its case against Mr O'Rourke over loans advanced for what Mr Justice Peter Kelly previously described as "land speculation" and development purposes in Counties Clare and Cork.

Mr Justice Kelly yesterday ruled Mr O'Rourke, Mill House, Ballyclough, Limerick, had made out an arguable defence to the bank's claim for €20.7m summary judgment orders against him entitling him to a full hearing. While Mr O'Rourke faced an uphill struggle to show that loan documents signed by him did not mean what they say, the judge said there was some support for his claim that AIB always understood, while the loans were advanced personally to Mr O'Rourke, his company Chieftain Construction Ltd was very much involved.

Mr O'Rourke argued the bank had not properly reviewed the loan arrangements before issuing its demand for repayment in November 2009 and that demand was not in accordance with contractual arrangements between the sides.

Mr O'Rourke further argued he should be permitted see all relevant documentation in possession of AIB related to dealings between the sides.

In personally opposing the summary judgment application earlier, Mr O'Rourke said it was intended the loans would be repaid from sales of completed units in developments but AIB's withdrawal of facilities had impaired his ability to repay interest. The bank's attitude to the Clare and Cork developments contrasted with its decision to provide continuing finance for another development at Keatingstown in Wicklow in which he was also involved with several high net worth investors.

While units in that development were being sold at a loss, the monies raised were providing cash flow to meet repayments, he said.



zombie

He said the bank's attitude changed in 2008 and 2009 when it was like "a zombie bank" and very difficult to make contact with.

Hugh Mohan, for AIB, said none of the matters raised by Mr O'Rourke amounted to a defence to summary judgment as he accepted he had received the monies. While the bank may have been irresponsible in some respects, that was not a legal defence.

hnews@herald.ie


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