Bank of Ireland has failed in an effort to block a UK High Court case alleging that it issued a £15.7 million (€18.3 million) loan in 2009 on the back of misleading information provided by an employee of the bank.
The plaintiff, Super Fast Trading Limited, owned by German investor Aryeh Ehrentreu, filed its claim against Bank of Ireland in 2023, alleging that it fraudulently misrepresented the value of a portfolio of properties in the Manchester area when it provided a loan to a company called Grindale Limited to buy them.
Super Fast is suing on behalf of Grindale, which succumbed to administration in 2011. Mr Ehrentreu was the sole director and joint owner of Grindale with his wife, Hannah Ehrentreu.
Super Fast Trading alleges that the proposal to acquire the portfolio of 36 distressed properties with a Bank of Ireland loan was put to Mr Ehrentreu by an employee of the lender in 2009.
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It claims the bank employee had told him it had secured a recent valuation on the properties from Knight Frank and there was “accordingly no need for Grindale to go to the cost of arranging a valuation of its own”, according to court documents.
However, Super Fast claims that the valuations were based work done in 2007, before the property crash, and were out of date.
The company alleges the employee “knew that, or was reckless as to whether” the property values used were too high.
During 2010, Grindale fell behind in loan payments, according to the claim. Bank of Ireland wrote to Grindale in March 2011 demanding repayment of an outstanding £12.5 million debt, and Grindale was put into administration as a result.
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The bank argued that the 14-year gap between the alleged offense and the filing of a case put it well beyond the six-year period in which such cases should generally be mounted. However, the High Court accepted the claimant’s argument that it “could not have discovered the fraud without exceptional measures which it could not reasonably have been expected to take” before receiving certain information in 2017.
“Following the Court’s judgement, the legal proceeding remains on-going and subject to the bank’s robust defence,” a spokesman for Bank of Ireland said.
