Bank gave shopkeeper €31.8m for development
A first-time developer was given a €31.8m loan to build a shopping centre in Monaghan even though he had never previously engaged in any developments, the Commercial Court has heard.
Jim McConnon, of Main Street, Castleblayney, Monaghan, was being pursued for the unpaid loan by Zurich Bank, Mr Justice Peter Kelly was told.
The shopping centre, at Main Street, had been built and had some tenants but was not full, the court heard.
Mr McConnon is seeking to defend the bank's application for €31.8m summary judgment against him on grounds the case raised issues as to whether he should be treated as a consumer within the meaning of the Consumer Credit Act, his counsel Ross Maguire said yesterday.
Mr Justice Kelly observed Mr McConnon borrowed some €32m for the project and queried how this raised issues under the Consumer Credit Act.
Mr Maguire said Mr McConnon was a shopkeeper who had never previously engaged in development "of any shape or size" and there were issues as to how it came about that the bank had approached him, not vice-versa.
One of the largest estate agents in the world had also provided valuations beyond what would be reasonably expected, he added.
Mr Justice Kelly said he would give Mr McConnon an opportunity to put on affidavit the basis for any defence that might be advanced to the bank's claim and he adjourned the case to next month.
The judge had earlier transferred the case to the Commercial Court list after rejecting arguments of delay on the part of the bank in bringing the proceedings.
The proceedings arose from a loan advanced to Mr McConnon in June 2007 for the shopping centre and to refinance loans held by him with another institution that were secured against lands in Castleblayney, including those on which the shopping centre was built. The loan was due to be repaid by May 2009.
It became apparent in 2009 that Mr McConnon could not get as many tenants as were needed for the shopping centre and had repayment difficulties, the court heard.
The bank gave Mr McConnon an opportunity to see if he could restructure his borrowings and advance a business plan.
But a plan submitted in June 2010 was rejected and a formal demand for repayment of the €32m loan was issued in mid-October 2010, counsel for the bank said. A receiver was appointed over the property on October 26.
Mr Maguire said it was apparent from May 2009 that the position was "hopeless" and no restructuring could possibly repay the level of debt.
Source Irish Independent