A SHAREHOLDER in Dublin's Blackrock Clinic is entitled to an order that the cost of redeeming a loan he had taken out to invest in the facility is €16.9 million, rather than some €20 million, the Commercial Court has ruled.
Joseph Sheehan, a consultant surgeon based in the US and one of the clinic's founders, claims a company controlled by businessman Larry Goodman, which bought the loan from IBRC, engineered a situation where he is not receiving dividends which he needs to pay off the loan.
The full case is yet to be heard but Mr Justice Robert Haughton made rulings on Friday in relation to some matters including how much Mr Sheehan would pay the Goodman company, Breccia, if he was to redeem the loan.
He also ruled, in a separate case by another clinic shareholder, John Flynn and Benray Ltd, of which Mr Flynn is a director, that the redemption figure in relation to their loan was €9.3 million and not the €11 million sought by Breccia.
The judge found Breccia, in accordance with the original 2006 loan contracts with the former Anglo Irish Bank, could claim the higher redemption figures in both cases. However, he also found part of Breccia's redemption figure contained an unlawful penalty.
That related to a 4 per cent interest surcharge, where there is default on the loans, of more than twice the normal rate. In Mr Sheehan’s case, that is a total of around €3 million.
He said Breccia was prevented by previous actions or determinations from claiming all or part of its actual redemption figures up to June 19th, 2015 but, from then on, is entitled to claim it on account balances.
Breccia could charge costs, charges and expenses in relation to enforcement of the loans but not in the amounts it sought, he said.
Mr Sheehan, who founded the clinic in 1986, along with his brother James, George Duffy and the late heart surgeon Maurice Neligan, claims in his main proceedings that Breccia attempted to engineer a situation so he would be excluded from the business.
He claimed Breccia “took advantage” by buying the loans, which he took out to purchase shares in the clinic business, for the purpose of now trying to acquire his shares.
The case arises out of the sale in 2006 by health insurer Bupa of its 56 per cent shareholding in the clinic operating company, Blackrock Hospital Ltd (BHL) to a number of others, including Breccia and existing shareholders. A shareholders agreement was drawn up between those involved to regulate the relationship of those holders of the entire share capital of BHL.
Mr Sheehan says, following subscription for the Bupa shareholding, he held 28.07 per cent, Breccia had the same, his brother James had 14.8 per cent, Dr George Duffy 13 per cent, Rosemary Sheehan 7.05 per cent, and Benray 8.02 per cent.
Mr Sheehan says he agreed all dividends from his shareholding would be paid by BHL into an account he held in Anglo.
He says he was not in default of interest payments on the loans facilities which he believes would have been renewed by Anglo had it not got into “difficulties”.
Following the special liquidation of IBRC, which had taken over the Anglo loans, Mr Sheehan says he made a formal bid to buy his and Dr Duffy’s loans for €24 million.
He believed only Dr Duffy’s loans were sold, for €8 million, to Breccia. He also believed that was done with the purpose of preventing the sale of Dr Duffy’s loans to him “and deliberately ruin the proposed purchase by me of my loans”.
He claims Breccia misused confidential information to do this and this alleged conduct was entirely unlawful.
Following the liquidation of IBRC, which wanted Mr Sheehan’s dividends from BHL to be paid into a new account, he resisted this and the board of BHL later agreed they should be paid directly to him. Subsequent dividends were not paid to him, he claims.
He made a second attempt to buy from IBRC his then outstanding loan of €16.1 million but that was also bought by Breccia which then issued a demand to him seeking immediate repayment of the loans, he said.
