NATIONAL IRISH Bank has appointed a receiver to a site that was the subject of a dispute between the institution, building group Durkan New Homes and some private investors.
NIB yesterday appointed John McStay of McStay Luby as receiver to a site that contains 11 houses in Beech Park, Cabinteely, Co Dublin. They were security for a €37 million loan to Durkan New Homes, Tullycross Developments and Don and Marian Casey.
Mr McStay only has charge of the 11 homes in question, and has not been appointed to any other assets or businesses belonging to either the Durkan construction operations or the Caseys. The bank’s rights only extend to the specific properties over which the receiver has been appointed.
Last July, the High Court dismissed NIB’s claim that it was entitled to a €37 million judgment against Durkan New Homes, Tullycross and the Caseys for a failure to repay the loan, which was secured against the 11 Cabinteely houses.
The companies and private investors borrowed the money in 2005. They planned to build new houses on the land. At the hearing, the judge upheld claims by Durkan and the other defendants that, because they had paid interest by the September 2008 repayment date, the bank’s recourse was limited to the security it held over the properties.
The judge also said that he was satisfied that if NIB had called on them, Durkan and the other defendants would have been able to remedy a breach of the loan-to-value covenants in loan agreements.
Under the original agreement between the parties, the debt could not exceed 70 per cent of the property’s value.
If it exceeded this amount, it was open to the bank to request a formal revaluation of the property, and then, if necessary, ask the borrowers to make a payment to reduce the loan amount and bring it back into line with the agreed loan-to-value ratio.
However, the bank did not go through this process, and the borrowers were not asked to take any of these steps.
The dispute between the bank and the borrowers dates back to early 2009 and the issue has been before the courts several times.
The bank originally got summary judgment against Durkan, Tullycross and the Caseys for €37 million in March 2009.
However, the Supreme Court threw this out following a subsequent appeal. It ruled that Durkan and its co-investors had a full defence to the bank’s claim and were entitled to a full hearing.
It then went to a full hearing earlier this year, which the investors effectively “won”, as the High Court upheld their claim.
The Caseys, who have an address in Beech Park, originally began putting the Cabinteely properties together as a potential development site.
Durkan and Tullycross, of which Neil Durkan is a director, subsequently became involved.
Durkan New Homes and the Caseys borrowed €30 million and Tullycross borrowed €7 million and their debts were secured against the Cabinteely site, which they co-owned.
