BACKGROUND:No evidence of contemporaneous rental agreements, counsel says.
DETAILS OF a January 2009 e-mail from Pat Whelan, the then head of Irish operations at Anglo Irish Bank, to bank official David Casey, were read out during yesterday’s court hearing.
At the time, the operator of the Morrison Hotel in Dublin, Morrison Hotel Ltd (MHL), was not making rental payments to the owners of the hotel, who were not able to service their borrowings from Anglo as a result.
Businessman Hugh O’Regan was on both sides of the equation, in that he was both a landlord and a director of the tenant company.
“I’m very worried,” Whelan wrote. “I don’t see any option apart from a receiver.”
He thought this could be very sensitive for the bank, as another company O’Regan was involved with had just drawn down a loan associated with a property on St Stephen’s Green, Dublin – a reference to Clubko Ltd, a company associated with a club at No 8 St Stephen’s Green. The bank wanted to appoint an accountant to examine the Morrison books. Whelan told Casey that whoever was appointed would have to tread sensitively.
In the following month when it was suggested that Martin Ferris might be appointed to examine the situation at the Morrison, O’Regan went “ballistic”, according to a Casey e-mail. He was concerned the appointment of a man known for his work as a receiver would affect the hotel’s business. Accountant Gerard Nolan produced a report for the bank in which he concluded that MHL was technically insolvent and unable to pay the rent due.
An issue of credibility lies at the heart of the case. According to the defendant, MHL, it had an agreement with O’Regan that it could charge expenditure on the hotel building against rent due in 2008 and 2009. Likewise, it says it was agreed in 2009 that the company would get a rent holiday until trade grew to €10 million per year net of VAT. The defendant also claims there was an agreement that the rent would be reduced to the “market rate of €10,000 per room per annum”.
However, Paul Sreenan, counsel for Ferris, said there was no contemporaneous evidence of these agreements. (Ferris was appointed receiver to the landlords’ interest in the hotel by Anglo Irish Bank in July 2009).
Also, the agreement with the bank meant the landlords, and MHL, could not make any agreement without the permission of the bank, Sreenan said.
When told about the alleged agreements, solicitors for Ferris described them as a “baseless self-serving attempt” by O’Regan to frustrate Ferris in his work. Casey told the court he had recently availed of the bank’s voluntary redundancy scheme.
