STATE-OWNED Anglo Irish Bank fired a shot across the bows of its former chairman Sean FitzPatrick in the High Court yesterday as it sought to prevent any further delay in its attempt to recoup loans totalling €110 million.
As first reported by The Irish Timeslast March, Mr FitzPatrick has sought measures to protect himself from his creditors – he is seeking a settlement of his debts under the protection of the court.
Mr FitzPatrick is seeking cover from the repayment demands of his former bank using a previously rarely-used provision in the 1988 Bankruptcy Act that heavily-indebted individuals are now turning to protect themselves.
Anglo demanded repayment of a number of loans from its former chief executive and chairman last November and the following month gave him an extension. The bank offered the extension to give Mr FitzPatrick and another former Anglo director Lar Bradshaw time to sell their interest in a Nigerian oilfield, the Ekeh Marginal Oil Field.
Mr FitzPatrick’s debt restructuring advisers – the consultancy run by former AIB board member Bernard Somers – had advised the bank that the oil well could prove a very successful investment and ultimately help repay the bank’s debt.
When the extension period ended, Mr FitzPatrick secured court protection on March 15th.
By applying for “arranging debtor” status, the former banker can agree a repayment schedule, or scheme of arrangement, with creditors to repay some or all of his debts. To achieve this, he must be supported by three-fifths of creditors in number and value of debt.
Anglo accounts for well over 40 per cent of his overall debts and is opposing any attempt by Mr FitzPatrick to reach a settlement. As a result, it claims his plans are bound to fail.
Fearing that Mr FitzPatrick would seek to delay a vote at a private creditors’ meeting on July 12th, Anglo asked the court to ensure this proceed as it was anxious to vote against any settlement proposal that he made.
As an alternative, the bank has asked to remove the court protection order granted to him last March, and to declare FitzPatrick a bankrupt.
Anglo is one of Mr FitzPatrick’s eight creditors and the bank has told the court that he has unencumbered assets of €29 million available for unsecured creditors.
The bank clearly believes that Mr FitzPatrick’s bid for arranging debtor status is a stalling tactic, given that the bank’s vote will hold sway on any proposal he makes given Anglo’s dominant debt position among his eight creditors.
Mr Justice Brian McGovern adjourned the matter until June 28th to allow Mr FitzPatrick lodge a replying affidavit to the bank.
Anglo’s counsel stressed that it would like any proposal to be voted on before the end of the legal term.
The bank has told the court that any dispute over the debts has the potential to extend the matter late into the year, following the courts’ summer recess.
A document showing proof of Mr FitzPatrick’s debts will be completed later this month which should determine whether Anglo has the controlling vote and the matter will be before the court again on June 28th, with the vote still scheduled for July 12th.
Mr FitzPatrick had wanted time to realise the best potential out of his Nigerian oilfield investment.
He claimed that the bank was pursuing him to show that it was not letting any former bank executives off the hook even at the expense of the bank’s ability to recover the most money from him.
The bank has rejected this, saying that there had been no discrimination shown against him, even on the basis of his former position, but equally there was no favouritism being shown to him.
Anglo’s former chief executive David Drumm is also being pursued by the bank – in an action over unpaid loans totalling €8.3 million. The case against Drumm listed before the court yesterday was adjourned until today.
