Patrick Halpin and his wife, Ann Keane, are sitting in the back office of Aberdeen Lodge, a B&B in the well-heeled Dublin suburb of Sandymount. They are staring at a TV screen with four feeds from the security cameras on their property. When they see the arrival of the party they are waiting for, they spring into action: "They're here."
The latest arrivals at the B&B, which is also their home, are not guests. And they are not welcome, either. “This is a little B&B,” fumes Patrick Halpin at the man and woman standing in the threshold of Aberdeen Lodge. “We are doing nothing wrong!”.
At the door are a solicitor and a receiver, who have just told him that he must surrender his home. They are there because while Aberdeen Lodge may be a small B&B in Halpin’s eyes, it has a big problem: €26 million in debt.
“Are you going to hand over possession?,” asks the receiver.
“We have nowhere to go,” Halpin shoots back. “We are standing our ground, we have no options.”
During the boom, Halpin took out a loan of €25 million from Irish Nationwide. Like many during the Celtic Tiger, he wanted to play the property game. Again, like many, his project - a hotel - fell over when the economy collapsed. The loan was transferred into IBRC, and it was sold to Goldman Sachs, the US investment giant which has just over $1.54 trillion in assets under management.
For seven years, Goldman Sachs has fought a courtroom battle against Halpin and Keane, seeking possession of Aberdeen Lodge. They secured their first possession order in 2013, and despite unsuccessful appeals by the couple which have been litigated all the way to the Supreme Court, the fund is now seeking to make good on the order.
Hand is shaking
After the receiver is told that the couple will not be handing over the property, he leaves and the couple retreat inside. Keane’s first instinct is to make tea - “it’s a real Irish thing to do” - but her hand is shaking as she spoons out the tea leaves. Halpin, who has five stents in his heart, complains first of back pains, and then of chest pains.
In the generous garden of Aberdeen Lodge, the sun is shining. A dog, whose hair covers furniture in the family's living quarters, paws at the back door. Upstairs, cleaners are making up beds and clearing out rooms. The B&B was almost full last night, and has new guests coming today. On the screen of the computer in the home office is a receipt from Booking. com. The walls of the office are covered with their two children's artwork; by the door to the kitchen is a star chart monitoring their youngest's progress eating his vegetables. He has, Halpin and Keane say, been off his food lately. They haven't told him anything about what is going on, but they believe he can sense the stress in the home.
The proceeds from the B&B - which is listed on Lonely Planet as a “carefully guarded secret” and “one of Dublin’s best guesthouses” - are currently going in large part to Goldman Sachs, according to the couple. They maintain that they are servicing their loan - which is true; but there are two debts at issue. They are making payments on a mortgage secured on the property, worth around €1 million. But there is a second development loan for the hotel project, for €25 million.
Fair game
Goldman Sachs has argued successfully in court that the development loan was subject to cross guarantees from the company which owns Aberdeen Lodge, and that the B&B, as an asset of that company, is fair game for repossession. They have argued that Halpin and Keane have lived there since February 2012 as trespassers, “with no right, title or interest in the property of any kind”.
The couple dispute the validity of the cross guarantee. They say that they were frustrated in their only attempt to get a judge to rule on whether it is valid, in 2016.
Sometimes you wake up at 3am and wonder how did we get into this. It's like they're eating into us - Patrick Halpin
Lawyers for Goldman Sachs described this as an attempt to "stymie possession" - it was ultimately dismissed as an abuse of process by the High Court. According to their legal team, the couple has offered €2 million to the fund. They have a funding offer for €1.6 million from a new lender, secured against the house, and have raised the remainder from family. Lisney has valued the house at €2 million, the same as what is being offered by the couple, while Goldman Sachs has said that it believes Aberdeen Lodge is worth closer to €3 million.
Halpin and Keane are distraught. If they are forced to leave Aberdeen Lodge, not only will they lose their home, but they will lose their income. They will, Kean says, be “put on the street”. They point out that the original development site, which Halpin drew the €25 million loan for, was sold by IBRC for around €2 million. Ultimately, once an aparthotel was built on the site, it was sold last September to Aviva for €17.5 million - a sum that would have gone a long way towards clearing their original debts, which they are still on the hook for.
From the fund’s point of view, things are more simple. Insofar as the courts have established, their claim on the B&B is legitimate. The couple are living in a multimillion euro property, while simultaneously owing €26 million in debt, the vast majority of which is not being serviced. Pepper, who service the loan on behalf of Goldman Sachs, have said that they have “pursued the effective and fair administration of justice”. In a letter to Kate O’Connell TD, who has taken up the couple’s cause, Pepper claimed that they have been “in unlawful occupation of Aberdeen Lodge for more than 7 years, living in and taking income from the property throughout”.
The future is uncertain for Halpin and Keane. In correspondence sent earlier this week, lawyers for Goldman Sachs said that if they couldn’t secure possession, they reserved their right to seek a motion for attachment and committal against the couple, which, if granted, could ultimately lead to their arrest.
While they are waiting, family and business life will continue in Aberdeen Lodge - after a fashion. But the legacy of debt and collapse will continue to overhang life there. “Sometimes you wake up at 3am and wonder how did we get into this,” says Halpin. “It’s like they’re eating into us”.
A spokesman for Goldman Sachs said: “We have extensive experience in working with borrowers in a range of circumstances and every effort has been made over a number of years to find a resolution to this matter. As a result, we have turned to established judicial processes with the courts repeatedly supporting our position. We review these matters carefully and have robust processes to ensure our action is appropriate to the circumstances in each individual case.”
