FINANCIER NIALL McFadden is opposing a court application by National Irish Bank for €6.3 million summary judgment orders against him arising from his personal guarantee over loans to acquire the Buy Sell classified ads business.

In separate proceedings, Mr McFadden, St James Street, London, is being sued by NIB for €8.56 million under another personal guarantee.

Mr Justice Peter Kelly yesterday reserved judgment on NIB’s €6.3 million application after hearing arguments on behalf of Mr McFadden that he had a credible defence to the claim.

When the judge asked Rossa Fanning, for Mr McFadden, whether his client might lodge monies into court if given conditional leave to defend the bank’s claim, counsel said he had no instructions in that regard and urged the judge not to take that course but to send the case unconditionally to full hearing.

NIB had advanced more than €18 million to Naldin Ltd, a company incorporated in May 2007 to acquire Buy Sell, secured on charges over the entire assets and undertaking of Naldin, BS Ltd and Buy Sell Northern Ireland Ltd. The bank demanded payment of some €18.8 million last September but no payment was made. NIB appointed a receiver to the companies last month.

NIB said, while the assets of the Buy Sell group would not meet the bank’s security for the loans provided, it had taken some comfort from Mr McFadden’s guarantee, especially where he also undertook, as long as he remained under any obligation to NIB, to maintain unencumbered assets of some €20 million.

In affidavits, Mr McFadden described as “unfounded” suggestions by the bank that he may be attempting to move his centre of main interests, for the purpose of European insolvency regulations, to England with a view to utilising a perceived more debtor-friendly bankruptcy procedure.

Mr McFadden said he had significant business contacts in London and had “a better prospect” of engaging in business there following the “undoubted financial difficulties that some of the businesses with which I was involved in Ireland have encountered in recent times”.

NIB’s own actions had made its debt less likely to be recovered, he said. He had proposed to buy the company out of examinership, the examiner had confirmed his was the best offer, but NIB had said they would not negotiate with him. NIB was now due to receive some €1.5 million from the receivership, “significantly less than any of the proposals made by me”.

Mr McFadden put together a deal in 2007 to purchase Buy Sell. Naldin Ltd bought the business from Associated Newspapers for €21.3 million in a deal funded by NIB.

After Naldin was unable to raise equity finance, the business ran into difficulties. An examinership failed, a receiver was appointed by NIB and the Buy Sell business was sold for some €1.9 million last month.

James Doherty, for NIB, yesterday asked the court to enter summary judgment against Mr McFadden for €6.3 million on foot of his personal guarantee of May 21st, 2007, related to bridging loan borrowings of Naldin. That guarantee was a condition precedent to the loan agreement, counsel said.

Counsel said Mr McFadden was contending he was not liable under the guarantee because the bank had extended the bridging loan without his agreement. Mr McFadden knew he was guaranteeing a bridging facility under a loan agreement that expressly contemplated a possible extension of time, Mr Doherty argued.

Mr McFadden had guaranteed the bridging facility on the basis it was a short-term facility for three months to be replaced by equity capital, which was never raised, counsel said.

The failure to raise the capital created an overwhelming interest burden for the company, despite the fact the underlying Buy Sell business was profitable well into 2008.

The three-month period was never amended in writing under any agreement between NIB and Mr McFadden but NIB allowed it continue for 27 months, counsel said. The fall in the value of the Buy Sell business showed this extension amounted to real prejudice to Mr McFadden, who never intended to be a long-term guarantor of Naldin’s indebtedness to NIB.

On those and other grounds, Mr McFadden had established a bona fide defence to the bank’s claim, counsel said.