FIVE PEOPLE who borrowed €8 million to buy properties in Bantry, Co Cork, were advised by an official of Zurich Bank on a strategy to “deceive” the bank’s credit committee into falsely believing they had raised the €550,000 deposit required for the loan, it was claimed before the Commercial Court yesterday.
Rossa Fanning, for the five, said the bank’s own actions in relation to advising his clients had been ascertained following a Freedom of Information request and disentitled it to the €8 million summary judgment orders being sought against them.
The information showed the bank was always aware the five did not have enough cash assets to meet the loan and that its recourse was limited to the properties involved, Mr Fanning said.
The five were told the bank’s credit committee required them to produce a €550,000 deposit for the loan, which they could not raise. However, a lending manager with the bank advised them they could “get around” this by artificially inflating the figures for professional fees put before the credit committee.
The result was the bank had itself lent them the deposit monies required, Mr Fanning said. This was “highly unusual” conduct involving the bank’s own credit committee being duped by a lending manager into thinking they had the deposit monies.
Declan McGrath, for the bank, said he was reserving his position on Mr Fanning’s allegations until he saw what was being put on affidavit by the defendants.
Mr Justice Peter Kelly directed that affidavits should be filed in the proceedings and adjourned the summary judgment application to October.
Zurich Bank claims the five defendants were involved in the Seafield Holdings Partnership which bought Vickery’s Hotel and two other properties in Bantry. The bank is suing them over unpaid loans to buy the properties, the combined value of which was put at €2.5 million late last year.
The proceedings are against Richard Coffey, Avoca Park, Blackrock, Co Dublin; Brian O’Hagan, Grove Avenue, Blackrock, Co Dublin; Donal Hunt, Cahir, Bantry; Rory O’Callaghan, Snave, Ballylickey, Bantry, and Viv O’Callaghan, Blackrock Road, Bantry, all trading as Seafield Holdings.
Zurich Bank appointed joint receivers over the Bandon properties on June 2nd. Even if the bank sold the properties, it was clear there would be a very significant shortfall, it said.
