THE QUINN family’s Swedish company is “hopelessly insolvent” and has no possibility of repaying massive loans owed to Anglo Irish Bank, lawyers for the bank told a Swedish court yesterday.
Quinn Investments Sweden has no more than 30,000 Swedish Krona (€3,277) in its coffers and lacks the assets to cover the 16 billion SEK (€1.8 billion) owed to the bank, Anglo’s lawyers said.
Anglo wants a bankruptcy receiver appointed to Quinn Investments, the holding company for the family’s international properties in Russia, Sweden, Britain, Turkey and Ukraine. The receiver would be empowered to sell the properties, worth about €500 million, and use the funds to compensate Anglo and other creditors.
The court will issue its decision on July 5.
Though Anglo insists the loans are valid and the responsibility for them extends to all companies, the Quinns’ lawyers say Quinn Investments is only responsible for the funds it received – about €129 million. Under Swedish law, companies can only guarantee loans they gained from, the lawyers have argued.
Quinn Investments has said it could raise as much as €344 million in three months through the sale of Russian properties located in Moscow, Kazan, Ufa and Yekaterinburg. But Anglo executives have expressed doubts about that timing of a sale and the valuation of the properties.
The Russian market is “difficult” and realising the value of the assets could take between 18 months and three years, Richard Woodhouse, a senior Anglo executive, said in an earlier testimony.
In court yesterday, property expert Thomas Lindeborg, characterised the Russian market as “volatile”. Due to heavy bureaucracy, the process for buying and selling properties is often much slower than in Europe, requiring twice as much paperwork, he said. A sale can take about six to 12 months if documentation from Russian authorities is required and dealing in the Russian market also requires a significant amount of resources and manpower, he testified over the telephone from London.
Also in court yesterday, Quinn Investments argued that measures taken by Anglo as a creditor to recoup the losses on Quinn loans have brought construction on some projects to a halt and impeded the family’s ability to maintain the properties in its portfolio. The value of the properties has deteriorated from 8 billion SEK to roughly 2 billion SEK as a result, the Quinn lawyers claimed.
A share receiver appointed by Anglo removed several executives and board members from Quinn companies.
In total, the Quinn family owes Anglo almost €2.9 billion, the lion’s share relating to loans that covered the losses on Anglo shares as a result of the 2008 financial crash.
The family has questioned the validity of the loans, which it says were advanced by the bank under the “false guise” of property lending. In reality, the funds were used to cover losses on Anglo stock purchased by the Quinns through “contracts for difference,” a type of leveraged bet on the bank’s share price.
The Quinn family eventually amassed a 28.5 per cent stake in Anglo and became exposed to significant margin calls when the bank’s share price began plummeting in 2007. Under pressure, the Quinns began to cover losses using loans from Anglo, former Quinn finance director Dara O’Reilly told the Swedish court last week.
Anglo’s lending was “tainted with illegality” and must be proven valid before any amount can be claimed, the Quinns have said.
But the company never questioned the validity of the loans until the bank demanded repayment in 2011, Anglo lawyers say. Had Anglo shares risen in value and the investments succeeded, the Quinns’ objections to them would likely never have been raised, they said.
