Allied Irish Banks has initiated court action in a bid to recover more than €550 million in unpaid loans and interest made to companies in developer Liam Carroll’s troubled Zoe Developments building group.
The bank claims the company has defaulted on the repayments.
It argues that it has security for the loans via equitable mortgages on the basis of letters of undertaking from the defendant companies’ solicitors and is seeking orders for the sale of a large number of commercial and residential property developments of the companies in Dublin and elsewhere.
Pending sale, the bank is also seeking orders appointing a receiver over the properties which include commercial and residential apartment developments, including some developments at Barrow Street in Dublin, Charlotte Quay and Islandbridge.
It is believed that because of the current state of the property market, should the bank succeed in having a receiver appointed, the receiver is likely to continue to rent the affected properties.
It is claimed the companies have defaulted on repayments of the sums due despite demands from the bank and have failed to pay any amounts due under a loan facility agreement of March 2009.
The bank demanded repayment of the loans last October after other key companies in the Zoe group were refused court protection on the basis they had failed to show they had a reasonable prospect of survival.
Lawyers for AIB are expected to apply to Mr Justice Peter Kelly at the Commercial Court on Monday to enter the proceedings against the five Zoe companies - Danninger, Eppo Developments, Fabrizia Developments, Oze Construction and North Quay Investments Ltd.
The case arises from a facility agreement of March 2009 made between the bank, the five companies and Vantive Holding, which is the key funding company of the Zoe group, under which AIB continued loan facilities of some €528 million to the five companies. It also agreed to make available additional loans, including for some €5.4 million to buy a site at North Wall Quay in Dublin.
AIB claims some €550 million is now owed to it under that facility agreement and claims it has security for that amount on the basis of letters of undertaking from solicitor Cathal N Young of O’Reilly & Company, solicitors for the defendant companies and the deposit of title deeds for the various premises.
It is seeking declarations from the court, on foot of those letters of undertaking and the deposit of title deeds, the €550 million sum stands “well-charged” on the various companies interest in the relevant lands and premises.
AIB also claims the five companies agreed to execute a joint guarantee in favour of the bank relating to the obligations of all the companies. It claims that guarantee was executed in late June 2009 and guaranteed payment on demand of sums specified in the guarantee.
AIB’s proceedings come just months after the Supreme Court made orders confirming the liquidation of key companies in the Zoe group after upholding a High Court finding they had no reasonable prospect of survival.
The companies had initiated their first bid for court protection in July last and AIB was among their main banking creditors who supported the petition. ACC was the only bank which opposed protection. A second bid for court protection, also rejected by the courts, was also supported by the main banks but opposed by ACC.
Protection was sought for Vantive Holdings and Morsten Investments; Villeer Developments; Peytor Developments; Carragh Enterprises Ltd; Parlez International Ltd and Royceton.
