A MASSACHUSETTS court has blocked Anglo Irish Bank’s forced sale of a laboratory, retail and office complex near MIT college and Harvard University in Cambridge in its attempt to recoup a loan of $180 million (€131 million).
The owners of One Kendall Square, a complex of 11 buildings, secured a preliminary injunction against Anglo blocking the sale of the properties and the bank’s foreclosure proceedings against them pending the final judgment of the court to resolve the stalemate.
Beal and Rockwood Capital claimed they have not missed any repayments on the loans.
The bank brought the action on the basis that the owners had breached the loan-to-value agreement on their borrowings, which prevents the debt rising above 75 per cent of the property’s value.
The nationalised bank said the Massachusetts property had declined in value during the economic downturn and that the owners cannot repay the debt in full. The injunction granted by the superior court of Suffolk County stops the sale of the property pending final judgment in the action taken by the owners against Anglo, and up to April 6th, 2011.
The court ruled that the owners had made a strong case that the foreclosure sale of the 650,000 sq ft complex, scheduled for December 16th, would cause them “irreparable harm”. “A foreclosure sale of the property would deprive [the owners] of its ownership of this unique real estate, as well as its very substantial investment,” said Judge Judith Fabricant, who also cited public interest reasons.
The forced sale of “such a large and prominent property would inevitably have a deleterious effect on tenants, neighbours and the community as a whole”, she said. The owners of the property have claimed that the complex is worth at least $203 million.
They claimed that Anglo had lost billions of euro at home and had “fabricated a technical default” by seeking to collect the owners’ loan before it falls due.
Anglo’s action involves “unfair business practices of a foreign bank perpetrated as part of a complex scheme to coerce cash out of successful American properties”, they claim in their lawsuit.
The bank provided most of its €9.3 billion US loan book over the peak years of the property boom between 2005 and 2007. Almost €3 billion of loans were provided around Boston and New England.
