Shane Phelan: ‘Sword of Damocles hangs over siblings to ensure their co-operation’
Seán Quinn’s five adult children began their High Court action against the Irish Bank Resolution Corporation (IBRC) last month hoping to avoid liability for €82m in loan guarantees they each faced.
They claimed the guarantees given to Anglo Irish Bank in 2007 and 2008 were invalid and could not be pursued by its successor, State-owned IBRC. But within days of the long-awaited action getting under way, it was clear things weren’t going well for them.
Persuasive points were put forward by the IBRC when it opened its defence of the case.
And one of the Quinn side’s key arguments, that they were under the undue influence of their father when they signed loan documentation, was blown out of the water by the trial judge last Wednesday.
By that stage, the writing already was on the wall for the Quinns and settlement talks were under way.
Both sides have spent the past eight years chasing each other through the courts.
In addition to the Quinn children’s action against the IBRC, the bank had counter-claimed for €82m against each of the children. The IBRC was also pursuing the Quinn family over an alleged conspiracy to strip €455m in international property group (IPG) assets.
The agreement that emerged yesterday brought an end to all of these proceedings. It was greeted positively by both sides, but in reality the IBRC has come off much better.
As part of the deal, the Quinn children each consented to judgments of just over €88m, with a stay being put on the debts being registered. It is understood the stay is conditional on the children’s continued assistance of the IBRC in its efforts to recover and liquidate the IPG assets.
The judgments will dangle over their heads like the sword of Damocles, threatening to fall if their co-operation with the IBRC is withdrawn.
The IPG was initially put together as a “nest egg” for the children. It included an 800-bedroom hotel in Prague, an office building in India, properties in Moscow and Kiev and hotels and pubs in Ireland.
But when Anglo moved to take control of Quinn assets in 2011, a plan was devised to put much of the IPG beyond the bank’s reach. Mr Justice Peter Kelly would later remark the scheme was one of “mesmeric complexity” which “reeks of dishonesty and sharp practice”. Another judge, Ms Justice Elizabeth Dunne, would jail Seán Quinn and his son Seán Jr for being in contempt of court orders aimed at reversing asset stripping.
It has taken several years and tens of millions of euro in legal costs, but the IBRC now effectively has control of the IPG.
Despite this, the ongoing co-operation of the Quinns is seen as essential for the efficient sale of the assets.
The court cases may finally be over, but the IBRC is not done with the Quinns just yet.