A business partnership involving broadcaster Gay Byrne is locked in a bitter legal battle to prevent a fund from selling its €13.5 million investment property in central Dublin.
Senior counsel Rossa Fanning, for the Firstwood Partnership, told the Commercial Court on Friday the Launceston fund had “contrived” a default last year on a fully-performing 20-year loan made to the partnership in 2000 to buy a block of offices, retail units and a car park at St Andrew’s Lane.
His clients, including the "best-known broadcaster in the country", were not professional investors, counsel said. They were professional people aged between 60 and 80 who got involved in this investment in 2000, funded via a loan from Anglo Irish Bank.
The partnership comprises Gay Byrne, senior counsel Anthony Kidney, two solicitors – Eric Brunker, now retired, and Stephen Hamilton – and Dermot Murphy of Clonskeagh Motors.
This fund, having bought “bundles of loans” at a discount, tries to make “a quick profit” by either identifying default or enforcing security, Mr Fanning said. That might make “good business” for them, but the court should not permit it at the expense of his clients’ entitlements.
IBRC
The fund acquired the partnership’s loan from State-owned IBRC in 2014 for an undisclosed sum and about €6.7 million was outstanding on the loan, which is due to expire in 2020, counsel said.
The fund was not at risk of not getting its money as the annual rental income is some €920,000 and the “high-quality” property was valued at €13.5 million in 2014, with no suggestion of a “cataclysmic” fall in commercial property values in Dublin since.
There was no default here because his clients had not fallen behind on payments agreed under an amoritisation schedule with Anglo and the fund “contrived” the alleged default, he said.
Firstwood’s proceedings are against Launceston Property Finance and a receiver appointed by it over the property, Stephen Tennant of Grant Thornton. Interim orders were granted last October and later efforts to settle the dispute in mediation failed.
On Friday, Mr Fanning asked Ms Justice Isobel Kennedy for injunctions , pending a full hearing later, restraining the receiver dealing with the property. His clients want to continue to receive rent from the property to meet tax and other liabilities and make loan repayments as agreed with Anglo.
‘Pension investment’
Opposing the application, senior counsel Declan McGrath, for the fund, said this property was essentially bought as a pension investment and this case appeared to be about the investors not wishing to be forced to sell it three years earlier than they wished.
The reality was rent paid to the receiver would merely be used to reduce the borrowings of the partnership, he said.
The court was effectively being asked to “rewrite” the loan documents and to find the “sophisticated” commercial agreements made by the borrowers and lenders did not mean what they said, he said.
Asked by the judge about the course of dealings between Anglo and the borrowers before the fund bought this loan, counsel said that did not advance the plaintiffs’ case. He said the loan agreements clearly provided all rent monies must be paid to the bank to meet interest and principal payments.
While the fund could not dispute Anglo knew, following the financial crash, not all the rental income was going towards interest and principal repayments, such knowledge did not amount to a formal agreement to vary the original agreements, counsel said.
The issue was not whether Anglo considered the loan in default but whether it was legally in default, he said. “It is in default.”
After the hearing concluded on Friday, the judge said she hoped to rule next week.
