AIB IS suing developer Paddy Kelly and his son Simon for €3.9 million arising from the collapse of the Thomas Read pub group.

The bulk of the claim relates to guarantees allegedly provided by the defendants over debts of some of the pub companies.

The Kellys are disputing the bank’s entitlement to recover some €3.58 million under a guarantee of March 2007.

But the Kellys’ counsel Gary McCarthy said yesterday they were consenting to judgment in two smaller amounts totalling some €361,000.

That smaller sum involves €301,608 relating to a €3 million loan advanced to both defendants in May 2006 to buy shares in the pub group.

Mr Justice Peter Kelly entered summary judgment against both defendants in that €301,608 sum yesterday after transferring the proceedings to the Commercial Court.

He also granted a summary judgment order for some €60,968 against Simon Kelly relating to an overdraft on a current account in his name with AIB.

The bank’s claim for judgment orders for the outstanding €3.58 million will be heard on July 23rd next.

In seeking to have the case admitted to the Commercial Court, Gráinne Clohessy SC, for the bank, said it will be arguing the guarantees entitle it to the orders sought.

AIB claims it had extended global working capital facilities to the Thomas Read group between December 2003 and March 2007.

The bank in its claim argues that Paddy Kelly, of Clonmore, Shrewsbury Road, Dublin, and Simon Kelly, The Rectory, Dunganstown, Co Wexford, acted as guarantors for the debts of certain companies in the Thomas Read group.

Simon Kelly was a director of Sharmane Ltd, the principal trading company in the group.

It is claimed both defendants signed a number of guarantees between November 2005 and March 2007 as security for facilities advanced, including a guarantee of March 23rd, 2007, to pay all sums due by Sharmane Ltd to AIB under the facilities provided up to a maximum €3.6 million, plus interest.

It is also claimed a guarantee of March 29th, 2007, provided both defendants would pay, up to a maximum €3.6 million, all monies due to AIB from Sharmane and nine other companies in the Thomas Read group.

The Thomas Read group was placed under High Court protection in November 2008.

The examiner was later discharged and a receiver was appointed in March last.

AIB claims the amount now due to it under the guarantees provided is some €3.58 million.