Last month in Dublin’s High Court, AIB failed in its bid to have former Fine Gael minister, Newstalk presenter and owner of Celtic Bookmakers, Ivan Yates, made bankrupt. The judgment in the case is published today, and in it, we find Ivan more than capable of brushing off AIB’s clumsy attempt to make him bankrupt in Ireland where he would have faced up to 12 years of draconian measures. You will be surprised to learn that Ivan did not even need to resort to the defence that his Centre of Main Interest (COMI) was not in the Republic, but the UK where Ivan lost no time after his victory over AIB here, and succeeded in getting a bankruptcy order in Wales last Friday morning!
The overview of the AIB case is this: the bank was seeking the repayment of €3.7m arising from loans to Ivan’s business which had been personally guaranteed by Ivan. AIB seemingly served Ivan with a pre-bankruptcy demand in April 2012, AIB then attempted to serve a bankruptcy summons on 14th May. There is reference to difficulty in serving Ivan and he was subsequently served in June. In response, Ivan applied to the Irish High Court on 25th June 2012 to resist AIB’s application, and the case was heard in August with the judge ruling on 21st August that AIB’s application was not valid. Lickety-split Ivan then obtained a bankruptcy order from the Swansea County Court on 31st August 2012.
We have all known for some time that Ivan was in financial difficulty, he made no bones about it and indeed wrote in newspapers in 2011 how he might have to leave Ireland to seek bankruptcy in the UK. So how on earth did AIB fail in its bid to make Ivan bankrupt here?
Firstly Ivan and his legal team threw a lot of mud which didn’t stick. For example, Ivan claimed that the personal guarantees produced by AIB were “poor and indistinct” photocopies so he couldn’t confirm if he had signed them. He claimed the bankruptcy demand served on 6th April was invalid because of a formal demand issued in March 2012 which allowed for payment by mid-May 2012.
Irish bankruptcy case law has established that even a relatively minor overclaim by the creditor in a bankruptcy application – IRL £1,000 in the context of a IRL £167,000 claim – may render the application by the creditor invalid. Bankruptcy is held by the courts to be a penal matter, so the sums claimed by the creditor need to be correct. In this case, Ivan disputed nearly €300,000 of the sums claimed. Ivan claimed there was an agreement with AIB which placed a cap on the fees paid to the receivers appointed to his bookmaking business at the behest of AIB, and in this case the receiver, Neil Hughes of Hughes Blake Accountants received a “kicker payment” – seemingly a bonus or commission – for the sale of one of the Celtic Bookmakers premises on Lombard Street in Dublin. Ivan also claimed that he had an agreement to stop the clock on interest being charged on certain loans. The personal guarantee provided for a certificate to be issued by “an officer of the bank” should the guarantee be called in, and it seems the judge very narrowly construed this requirement and the judge ruled that “it was noted that, contrary to the express requirements of the guarantee, no officer of the bank is named in the certificate or avers on affidavit to having prepared the certificate. Instead the certificate purports to emanate from the bank as a corporation and is signed by two authorised signatories on behalf of the bank.” The judge held that “the issues raised are real and substantial and have some prospect of success”
So the lesson for creditors pursuing bankruptcy against debtors in Irish courts is that they must ensure the amount claimed is correct and not in dispute. It may be that a judgment order is required as a prerequisite to pursuing bankruptcy. And it seems Irish judges can be quite pedantic in closely following the letter of any agreement.
As we own 99.8% of AIB, we will be footing the cost of AIB’s cackhanded and failed attempt to have Ivan made bankrupt here, and we are entitled to demand answers and accountability for the expenditure of our money.