Banks get orders requiring Lynn to repay €12m

Allied Irish Banks plc and First Active plc have secured court orders requiring solicitor Michael Lynn to repay loans of almost €12 million.

Mr Lynn's practice, Michael Lynn & Company, has been closed by the Law Society and he is alleged to have taken out multiple mortgages with different financial institutions.

Two other banks, Bank of Scotland Ireland and Permanent TSB, will also apply to the Commercial Court on Friday for judgment against Mr Lynn for more than €16 million.

Permanent TSB has brought separate proceedings against Fiona McAleenan, described as a former partner/practising solicitor in Mr Lynn's firm and Mr Lynn's companies, arising from personal undertakings she allegedly signed relating to loans from the bank to Mr Lynn for some €10.5 million.

It also emerged yesterday that some 52 writs have been issued to date against Mr Lynn, whose total liabilities are unknown but which have been estimated at more than €70 million.

Gabriel Gavigan BL, for Mr Lynn, indicated that Mr Lynn may initiate proceedings under Section 87 of the Bankruptcy Act aimed at finding an "orderly" way of meeting his liabilities. (Section 87 does not necessarily lead to a person being declared bankrupt but prevents further judgments being registered against them while their assets are dealt with by the Official Assignee in bankruptcy).

Mr Gavigan said Mr Lynn wanted all his creditors dealt with in an equitable fashion and to avoid a "mad scramble" for the purpose of obtaining judgment against him.

Counsel said a forensic accountant's report is being prepared to assess his client's state of indebtedness and to identify whether there was a surplus or deficit of assets over liabilities.

He was also awaiting valuations of properties outside the jurisdiction before completing an affidavit relating to his financial affairs. While Mr Lynn accepted he was indebted to AIB and First Active for principal sums of €6.8 million and €5.1 million respectively, he was concerned about additional sums being sought in interest, counsel said. Mr Lynn also did not accept aspects of what was being stated in affidavits concerning his dealings.

Counsel was responding to separate applications before the Commercial Court by Denis McDonald SC, for AIB, and Eoin McCullough SC, for First Active, for judgment to be entered against him in the sums of €7.1 million and some €5 million respectively.

Mr McDonald and Mr McCullough urged Mr Justice Peter Kelly to enter judgment against Mr Lynn. Mr McDonald said no petition had so far been moved under the Bankruptcy Act and his side would be very concerned about any stay being granted on any order for judgment.

First Active told the court in an affidavit it was concerned that Mr Lynn may have sold on three properties which were part of security for loans advanced by it to him. During yesterday's proceedings, Jarlath Ryan BL, said he was representing a man who had in good faith purchased a house at Derreckstown, Dunshaughlin, Co Meath, from Mr Lynn in August 2006 but who had been unable to register title. His client was concerned, if AIB got judgment against Mr Lynn, that this might be attached to a security over his home.

Mr McDonald said no mortgage was in place over the Derreckstown property other than an equitable mortgage on foot of a letter of undertaking.

PERMANENT TSB: takes case over €10m loans

Permanent TSB has also brought proceedings against Fiona McAleenan, described as a former partner/practising solicitor in the firms of Michael Lynn & Company and Capel Law, and those two firms. The proceedings are in relation to loans for more than €10 million to Mr Lynn issued, the bank claims, on security of personal undertakings of Ms McAleenan, then a partner/practising solicitor in the two firms.

The bank is seeking orders requiring Ms McAleenan, with an address at Bethaghstown Wood, Bettystown, Co Meath, to comply with those undertakings.

If such undertakings cannot be complied with, it is seeking compensation for losses suffered by it as a result of Ms McAleenan's alleged breach of undertaking.

It is also alleged that Ms McAleenan was negligent in relation to the taking of security on behalf of the bank and that, under the Partnership Act 1980, the two firms of which Ms McAleenan was a partner - Michael Lynn & Company and Capel Law - are liable for her alleged wrongful acts or omissions.