Four Altada Technology Solutions creditors, who loaned the company €500,000 shortly before its collapse late last year, say they were assured by one of the Cork-based firm’s co-founders that additional funding of at least $160 million was being lined up to help plug gaps in the troubled artificial intelligence business’s financing.
Businessman Alan Bruce has also claimed that he and the other three lenders – Lynn Bruce, Grattan Boylan and Noreen Gallagher – were not made aware of a provision in the company’s constitution requiring any such borrowings to receive majority shareholder consent.
The allegations are contained in an affidavit that Mr Bruce filed in the High Court recently, part of a legal row over the priority of creditor claims in the liquidation. The Revenue Commissioners, to whom Altada owes in excess of €2 million, have made an application to the High Court questioning the legality of the loan, which the tax authority claims should not have been allowed to proceed given the company’s level of insolvency at the time.
Mr Bruce and the other lenders subsequently appointed a receiver to the company on foot of the loan.
In previous affidavits, Altada’s liquidator – who was appointed to the insolvent company on foot of an application by a different creditor, a company called Datech, controlled by US businessman Jeffrey Leo – has given evidence that Altada was heavily insolvent at the time the €500,000 loan was advanced.
The liquidator, John Healy of Kirby Healy Chartered Accountants in Dublin, previously alleged that the directors – husband and wife duo Allan Beechinor and Niamh Parker – were told that the terms of the loan “are clearly exorbitant and punishing”.
Altada’s directors were also warned by their counsel that “majority shareholder consent is required” before the agreement could proceed. However, they were told: “We expect [the loan terms] will not be acceptable to the shareholders so consent will not be provided.”
In his latest affidavit, Mr Bruce said he and the other lenders “would not have advanced the loan if we had known that consents were not only legally required but were also outstanding”. He said: “The lenders did not know of any prohibition with regard to the creation of the security in their favour.”
The liquidator had previously referred to an email between Mr Beechinor and an independent expert appointed to the company by Enterprise Ireland. In the exchange, Altada’s co-founder allegedly described the loan as “an interim/good faith payment while consent was being sought”. But Mr Bruce said in his latest affidavit: “For the record, I confirm that the lenders did not know of the email exchange [...], nor, for the avoidance of doubt, did they know the way the loan had been characterised.” He said this was “never the position of the lenders nor was any such position ever articulated to us by Mr Beechinor”.
Elsewhere in the affidavit, Mr Bruce said the directors had assured the lenders that, before the bridging loan, the company “had devised a strategy to successfully discharge all outstanding commitments” which included an equity sale to be managed by JP Morgan and a loan from the European Investment Bank.
He said: “It was represented to the lender by the directors of the company [...] that the JP Morgan managed equity sale was ‘imminent’ and that it was anticipated to comfortably achieve $160 million.” Although this funding never materialised, Mr Bruce said the lenders had “reasonably believed” the representation and “had no grounds to disbelieve” it.
Mr Beechinor and Ms Parker could not be reached for comment. The matter is listed for mention again in the High Court later this month.
