ANGLO IRISH Bank is entitled to just €129 million from a property company in Sweden controlled by Seán Quinn’s family, lawyers for the family argued yesterday.

Anglo wants a bankruptcy receiver appointed to Quinn Investments Sweden, the holding company for the family’s international properties in Sweden, Britain, Russia, Turkey, Ukraine and India.

The receiver would have the power to liquidate the company, a major entity in the Quinn Group, and sell its properties. Together they are estimated to be worth about €500 million.

Anglo however is only entitled to claim the amount of the loans provided specifically to Quinn Investments from the Anglo funds – about €129 million, lawyers for Quinn Investments told the Stockholm district court.

Although Anglo’s guarantee on the loans included all Quinn companies, under Swedish law, firms could only guarantee loans they gained from in principal, they said.

In a sale process that could take as little as three months, Quinn Investments Sweden could raise €344 million through the sale of properties in Russia, more than enough to cover the amount it owed Anglo, lawyers for Quinn Investments said.

For that reason, they argued, the company could not be declared insolvent and since the €129 million was properly secured, the bank could not seek a liquidation.

Richard Woodhouse, the Anglo executive in charge of negotiating the loan repayment with the Quinn family, offered a lower estimate for the value of Quinn Investments assets at between US$380 and $400 million and said a sale process would take “considerable time”. “In my view, liquidation of satisfactory value would take 18 months to three years,” he said in testimony. “It is possible to sell at an accelerated basis but at a lower value than I quote.”

Lawyers for Quinn Investments will present an expert on Russian real estate to the court when the proceedings resume on Tuesday.

Mr Woodhouse added that the debts in question were “absolutely valid and overdue for payment”.

The Quinn family owes Anglo almost €2.9 billion, of which €2.3 billion relates to loans that covered the losses on Anglo shares as a result of the 2008 financial crash. Lawyers for Quinn Investments say the loans must be proven valid before any amount can be claimed.

The Quinns claim the loans were advanced under the “false guise” of property lending when in reality they were used to cover losses on the family’s investment in Anglo shares. Those investments were made through contracts for difference, a type of leveraged bet on the bank’s share price.

Anglo contracts: how they worked

FOR THE first time in open court, a Quinn executive yesterday outlined how the loans from Anglo to cover losses on stock market investments were obtained.

Former finance director Dara O’Reilly said the use of contracts for difference began in the autumn of 2005 and involved investments in financial services companies, oil companies and some airlines, including Ryanair.

By early 2007, worldwide equity markets were under pressure and the share price of Anglo deteriorated. At first, the losses or margin calls on Anglo investments were financed by Quinn resources.

However, when those resources became “extremely limited”, the group began to cover the debts with loans from Anglo, a practice that became more frequent.

Mr O’Reilly would contact the manager at Anglo and give a “rough calculation” of how the margin call had been determined.

Documents were drawn up stating “property development “ as the purpose of the loan and Mr O’Reilly would then obtain the necessary signatures so the funds could be transferred, he said.

“When I rang the bank on a very frequent basis in 2008, it was very clear it was for margin calls.”