Blackrock Clinic founder Joseph Sheehan has accused one of beef baron Larry Goodman's companies of deliberately inflating to €19.6 million the sum required to pay off loans secured against his shareholding in the clinic.
Mr Sheehan claims the appropriate figure for the redemption of his loans is €16.5 million but Breccia, which the court heard acquired the loans from State-owned Irish Bank Resolution Corporation for some €17.3 million, has sought some €3 million more than that.
The €19.6 million figure is “a deliberate tactic” and “a form of attrition” by Breccia to wear down Mr Sheehan in such a way his financiers would eventally lose interest and “disappear” and he would be unable to raise the necessary finance to redeem his loans, John O’Donnell SC, for Mr Sheehan, said.
Mr Sheehan was told by IBRC in 2014 it would cost some €16.1 million to redeem the loans but, in June 2015, Breccia told him the price was €19.6 million, counsel said. Breccia was not entitled to add surcharge interest and “enforcement” costs totalling almost €3 million, Mr O’Donnell argued.
The surcharge interest was an “unenforceable penalty” of some €2.1 million while the enforcement charges were an “extraordinary” sum of €93,000, based on €68,500 solicitors fees and €24,600 counsel’s fees up to June 2015, Mr O’Donnell said.
That €93,000 sum was sought for sending one letter of demand and dealing with Mr Sheehan’s injunction proceedings in which effectively no injunction hearing took place, he added.
Mr Sheehan was seeking “effective” court orders that would allow him redeem his loans at a fixed redemption figure and prevent Breccia obstructing that redemption, counsel told Mr Justice Robert Haughton at the Commercial Court.
Breccia denies the claims and argues it is entitled to seek the €19.6 million.
Brian O’Moore SC, for Breccia, said his client had paid IBRC some €17 million for the loans, plus expenses of almost €300,000.
Among various pleas, Breccia claims general corporate conditions attached to the relevant loans, which entitles it to levy the disputed charges on the loans.
The case arises from loans totalling almost €18 million made by Anglo to Mr Sheehan in 2006 and 2008. The loans were later taken over by IBRC and ultimately sold to Breccia.
Mr O’Donnell said the loans, contrary to what Breccia alleges, were not corporate loans. At all stages, the only interest charged was 1.75 percentage points over the Euribor rate, which was the interest provided for in the facility, he said.
Counsel said Mr Sheehan had sought to buy back the loans and was told by IBRC he could buy them back at par. There was no reference in correspondence to surcharge interest or enforcement costs, he said.
Mr Sheehan had sought to refinance purchase of loans through what was known as the Talos transaction which ultimately fell through, counsel said. He was told by IBRC later in 2014 that he could apply to purchase them based on the gross loan balance and there was no dispute that figure at the end of July 2014 was some €16.14 million.
Mr Sheehan had relied on that figure in negotiations aimed at raising the finance to redeem the loans, which IBRC had carved out for sale under Project Amber, and also in advancing a bid of some €16.8 million for that purpose, he said.
His bid was unsuccessful and IBRC later informed him his loans had been sold to Breccia for a higher figure based on an offer that was not conditional on any funding. The transfer of the loans took effect on December 10th, 2014.
The case has been adjourned to continue on Tuesday.
