Order confirmed giving AIB charge over 90,000 shares

THE COMMERCIAL Court has opened the possibility that AIB could sell a 9 per cent stake in the company behind Barry’s Tea to enforce an €8 million judgment against one of its directors and shareholders, Donagh Barry.

Mr Justice Peter Kelly confirmed an order made two weeks ago giving AIB a charge over 90,000 shares in Barry’s (Cork) owned by Mr Barry.

The court also gave the bank liberty to apply to sell the shares, once it has given notice to Mr Barry.

The bank is seeking to enforce a judgment against him for €8 million that relates to a failed property venture undertaken by him and his brother-in-law, Michael McCarthy.

Barry’s (Cork) is the holding company behind Barry’s Tea, the business owned by the family of former foreign minister Peter Barry.

The group has been in the family’s control since its foundation in 1901. It distributes 40 per cent of the €78 million worth of tea sold by retailers around the country every year. It employs 70 people.

The ruling means that the bank effectively steps into Mr Barry’s shoes as owner of the stake in Barry’s (Cork). AIB will have the same rights and obligations as other shareholders.

This could give it the right to sell the stake. However, if the shareholders’ agreement limits this – for example, by allowing the company or other shareholders to make an offer for it before anyone anyone else – then the the bank is bound by this.

Company documents show that Mr Barry’s older brother, Tony, owns 55 per cent of the company. Five other family members own 9 per cent each.

AIB refused to comment but sources suggested that it would be unusual for it, or any other bank, to hold on to such an asset over the medium or long term.

In cases such as this, banks would normally try to enforce their security against another property. This is one of the first instances where the property collapse has had an impact on the real economy.

Mr Barry, Cowper Road, Rathmines, Dublin, did not oppose the bank’s application. AIB was originally granted a judgment for €8 million against Mr Barry and Mr McCarthy, of Ballinlough, Cork, in May.

Their company, Central Plaza Properties Ltd, borrowed €18 million from the bank in August 2007 to develop a site in the Mahon area of Cork city.

Both men gave personal guarantees up to a maximum of €8 million each as security for the loans. The development did not go ahead as the property market crashed the following year.

The company defaulted on interest payments in 2009 and the bank demanded repayment, but none were made. AIB then began proceedings against them.

The pair had previously been involved in a number of successful property deals in Cork city.

Mr Barry has a number of other business interests. He is a director of Dublin-based catering supplies firm Hugh Jordan. Mr McCarthy is a director of IT services firm Compuland, and Maclock, a security equipment business.