Bank of Ireland has secured an order for judgment for €3.4m against property developer Paddy Kelly over alleged non-repayment of loans.
Rossa Fanning, for the bank, said it had brought its proceedings in the Commercial Court, which fast-tracks legal actions, in the context of Mr Kelly telling the court last month that his liabilities exceed his assets and he is considering the possibility of bankruptcy.
When the proceedings were called, Mr Justice Peter Kelly asked was there any appearance by or on behalf of Mr Kelly, of Clonmore, Shrewsbury Road, Dublin, to which question there was no response.
Mr Fanning told the judge he was not expecting any appearance on behalf of the defendant, adding while there had been ‘tentative’ contact by a legal firm with the bank, no appearance had been entered.
After examining legal documents served on Mr Kelly's address which were accepted by Mr Kelly and his wife, the judge said he was satisfied service of the proceedings had been effected.
Mr Fanning said the proceedings related to commercial borrowings for some €3.2m in July 2007 to refinance a property at Baggot Street, Dublin.
In documents, the Bank said a condition of the loan facility was that it be fully repaid no later than July 31 2008.
Mr Kelly failed to make required interest and surcharge payments of some €50,460 on July 23 2008 and also failed to make other interest repayments later in 2008.
He also failed to pay the principal amount due on July 31 2008.
The Bank demanded repayment of the sums due on December 22 last but the sums remained unpaid. The amount due on March 31 last was some €3.46m, plus continuing interest.
The judge said he was satisfied the bank was entitled to an order for judgment in the amount sought, plus interest.
When Mr Fanning applied for legal costs, the judge remarked the application could have been brought in the Central Office of the courts given it was not opposed.
Mr Fanning said the application was moved in the Commercial Court in circumstances where Mr Kelly, in other proceedings last month, had said his liabilities exceed his assets and he was considering bankruptcy.
In light of those comments, the court had predicted a ‘rush to judgment’ by creditors of Mr Kelly and the bank could not be criticised for bringing its claim by the most expeditious route, the Commercial Court, counsel said.
Mr Justcie Kelly said he would grant the bank its costs.
On March 16, Paddy Kelly consented to the court making an order requiring him to pay some €131,000 to an insurance broker, Hugh McGivern, under a settlement of separate proceedings arising from a share purchase agreement.
Mr Kelly said in an affidavit in that case he simply could not give assurances to Mr McGiven as to his ability to discharge the sums due and it was a matter of ‘great personal regret’ he had not been able to honour his financial commitments to Mr McGivern and others.
Mr Justice Kelly said on that occasion a ‘serious situation’ was disclosed from the affidavits, adding he would not put a stay on the judgment order as there may be ‘a rush to judgment’ by other creditors.
In his affidavits, Paddy Kelly said Anglo Irish Bank had stopped any further drawings on a facility granted in February 2008 and this had ‘a dramatic impact’ on his ability to access funds to discharge ongoing rental obligations.
The position ‘is that my liabilities exceed my assets’, Mr Kelly said. ‘I have been very concerned about this situation for some time as the credit crunch and economic downturn has progressively worsened’.
He was determined to deal with the situation in an ‘open and transparent manner’ and had taken active steps to explore the possibility of instigating the process leading to implementation of a personal scheme of arrangement under the Bankruptcy Act or under any order the court might make, he added.
