The High Court granted Allied Irish Banks plc summary judgment against the guarantors who remained defendants in a dispute over loans for a hotel in Toulouse, France. Mr Justice Max Barrett delivered the judgment on 2 December 2015.
The defendants were shareholders in Blagnac Investments Limited, which owned a Luxembourg company that in turn owned the French borrower, 2 Rue DieudonnesCostes SAS. The borrower owned the Radisson Blu Hotel in Toulouse. AIB had provided the borrower with loan facilities in 2008, and the defendants guaranteed repayment. Each guarantor’s liability was several and limited to a defined amount.
The borrower defaulted. AIB demanded €27,021,326.91, plus continuing interest, from it on 15 July 2015, then demanded the same sum from the guarantors two days later. AIB had reached a compromise with three defendants—PJ Flynn, Donal Kelleher and Ray Reidy—so the proceedings continued only against the remaining guarantors.
Those guarantors argued that the guarantee required AIB to exhaust its rights against the borrower group before seeking payment from them. The court rejected that interpretation. It considered evidence that AIB had demanded payment from the borrower and related companies, appointed a receiver over the parent company’s assets, and taken steps through the receiver to change management at companies in the group. The receiver had also taken preparatory steps to market the hotel, though a separate challenge to the receiver’s appointment was impeding that process. The judge concluded that AIB had “first proceeded” against the group obligors as required by the guarantee. He said the issue could be decided on the evidence before him without a plenary hearing.
The guarantors also contended that a July 2014 amendment and restatement deed settled the old debt and created a new one, ending any liability under the guarantee. The court said it did not need to decide whether the 2014 arrangement amended or replaced the earlier facility agreement: the guarantee covered the agreement as amended, varied, supplemented or replaced, so replacement would not extinguish liability.
The judge applied the established test for summary relief, under which leave to defend should be granted if a defendant shows an arguable defence. Having considered that test and the issues raised, he granted the summary judgment sought by AIB. The judgment does not state the individual sums payable by each surviving guarantor or set out a separate order quantifying their liabilities.