Allied Irish Bank has secured appointing a receiver over a large number of properties owned by companies in the insolvent Zoe Developments group as part of its effort to recover loans of over €550 million.
Receiver William G O’Riordan will have the power to effectively act as a landlord of the properties, manage the companies’ interest in them, receive rents and enter leases, Mr Justice Peter Kelly directed in the Commercial Court.
The receiver was not entitled, at this stage, to enter into possession of or to sell the properties, he added.
AIB had already, in his view “wisely”, said it would not be seeking to sell properties given the current “wretched” state of the property market, he noted.
The judge appointed the receiver after making orders the €554 million loans are “well-charged” over the various properties via equitable mortgages created on the basis of undertakings by solicitors for the Zoe companies to hold the title deeds of the properties in trust for AIB. All title deeds have been lodged with the bank.
While this was “an unusual security given the extraordinary amount of money loaned”, it was additional to other securities, the judge said. There had been an intention to create legal mortgages which had not proven possible, he noted.
However, the bank was prepared to make the loans available under this arrangement which, while less satisfactory than a legal mortgage, was not devoid of legal effect provided the title to the properties was good.
The letters of undertaking had charged the companies title to the properties in favour of the bank and, in all the circumstances, AIB was entitled to the well-charging orders, Mr Justice Kelly ruled.
He also rejected suggestions by the official liquidator of two other companies in the Zoe group, Vantive Holdings and Morsten Investments, that the receiver is not entitled to receive rents purely for the benefit of AIB alone and not all other creditors.
He further directed that issues relating to an Ulster Bank charge over a property owned by Fabrizia be clarified in an affidavit. Denis McDonald SC, for AIB, said he understood that charge did not related to the properties over which AIB held security but would provide an affidavit in that regard.
AIB had brought its action against five Zoe companies - Danninger, Eppo Developments, Fabrizia Developments, Oze Construction and North Quay Investments Ltd.
Bernard Dunleavy, for the companies, indicated earlier this week they would not be opposing the making of the well-charging orders or the appointment of a receiver.
