Bank lent €31.8m to first-time developer, court told

A MAN being pursued over an unpaid €31.8 million loan for a shopping centre in Co Monaghan has claimed he was a shopkeeper who was given the loan by Zurich Bank despite never having previously engaged in any developments.

Jim McConnon, Main Street, Castleblayney, is seeking to defend the bank’s application for €31.8 million summary judgment against him on grounds the case raised issues as to whether he should be treated as a consumer within the meaning of the Consumer Credit Act, his counsel Ross Maguire SC said yesterday.

Mr Justice Peter Kelly observed Mr McConnon borrowed some €32 million to build a shopping centre and queried how this raised issues under the Act.

Mr Maguire said Mr McConnon was a shopkeeper who had never previously engaged in development “of any shape or size” and there were issues as to how it came about the bank had approached him, not vice versa. One of the largest estate agents in the world had also provide valuations beyond what would be reasonably expected, he added.

Mr Justice Kelly said he would give Mr McConnon an opportunity to put on affidavit the basis for any defence that might be advanced to the bank’s claim.

He adjourned the case to next month.

The judge had earlier transferred the case to the Commercial Court list after rejecting arguments of delay on the part of the bank in bringing the proceedings.

The proceedings arose from a loan advanced to Mr McConnon in June 2007 for a shopping centre at Castleblayney and to refinance loans held by Mr McConnon with another institution which were secured against lands in Castleblayney, including lands on which the shopping centre was ultimately built.

The loan was due to be repaid by May 2009. While the shopping centre was built, it became apparent in 2009 that Mr McConnon could not get tenants for it and had repayment difficulties, counsel for the bank said. While the shopping centre had some tenants, it was not full, the court heard.

The bank gave Mr McConnon an opportunity to see if he could restructure his borrowings and advance a business plan, but a plan submitted in June 2010 was rejected, counsel said. A formal demand for repayment of the €32 million loan was issued in mid-October 2010 and a receiver was appointed over the property on October 26th last.

Mr Maguire said it was apparent from May 2009 that the position was “hopeless” and no restructuring could possibly repay the level of debt.