A RECEIVER appointed by Anglo Irish Bank has sued the company operating Dublin’s Morrison Hotel for €5.3 million in alleged unpaid rent.

Paul Sreenan SC, for receiver Martin Ferris, said yesterday there was an issue about the truthfulness of evidence related to whether businessman Hugh O’Regan, one of the hotel’s owners, had agreed “rent holidays” or rent credits for the hotel. The court would have to decide the credibility of these claims, he said.

In 2009, after the hotel was mortgaged to Anglo via loans of €41.5 million, Mr O’Regan seemed to have agreed to give the hotel “a rent holiday” until turnover exceeded €10 million, counsel said.

Mr Sreenan said it was “not entirely clear” who the rent holiday agreements were with but Mr O’Regan had certainly “agreed with himself” in 2008 to give a rent credit for the €2 million costs of integrating the old Morrison hotel with an extension.

Mr O’Regan also gave a rent credit of €800,000 for the leasing costs for fixtures and fittings, counsel added.

A core issue in the case was that the mortgage had assigned the landlords’ interest in the hotel to Anglo, counsel said. It was the receiver’s case that the assignor of that interest, therefore, had no power to do rent deals and such deals could only be done by Anglo.

He was opening the proceedings by Mr Ferris, appointed by Anglo in July 2009 as receiver to Mr O’Regan’s Thomas Read Holdings, against the Morrison Hotel Ltd (MHL). Mr O’Regan was in court for the proceedings.

Mr Ferris has alleged that arguments on behalf of Morrison Hotel Ltd that it was entitled to offset money spent on renovations of the property against rent were “contrived” and it had no bona fide defence to the rent claim.

The shareholder of Morrison Hotel is Thomas Read Holdings, in liquidation. The hotel’s directors are Mr O’Regan, Martin Conroy and Dolores Barry. The hotel is owned by Mr O’Regan, Patrick Kelly and Patrick Dunning.

In October 2006 the hotel group entered two leases with the landlords relating to the hotel and what was known as the Morrison Hotel extension. Under those leases, MHL was to pay €1.4 million rent per annum quarterly to Mr O’Regan and a further sum under the extension lease.

Mr Ferris said his solicitors wrote to Morrison Hotel Ltd on July 30th last advising all future rent should be paid to him as receiver. He was informed by its solicitors on August 12th last they were instructed rent had been discharged “to date”.

Mr Ferris said the solicitors later stated that the hotel group was not liable for rent because of agreements entered into with Mr O’Regan in July 2008 and sometime during or after April 2009. He was also told MHL and Mr O’Regan had agreed to offer credit against rent for works carried out by the group of some €2 million and leasing costs of €800,000.

If those alleged credits were in fact agreed at that time, MHL would not have been liable to pay rent after that but it had paid rent of €855,616 in July 2008, Mr Ferris said.

A draft report of April 2009 prepared for Anglo following financial due diligence of MHL had recommended that rent payable would have to be renegotiated with a view to a substantial reduction and also stated a rent-free period was required for the remainder of the year and until there was a “substantial pick-up” in trading.

This was a recommendation and could not have been implemented unilaterally by MHL and Mr O’Regan without Anglo’s consent, which was not provided, Mr Ferris claims.