Monday, June 17, 2024

Bank of Ireland sues former Davy Stockbroker owners

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Last year, Ailmount Investments Ltd, which held the legal interest in a firm acting for a company representing 722 investors in Davy, brought proceedings against BoI firm, BoI Nominee 1 Ltd, claiming the bank unlawfully withheld a deferred payment of some €15.3m due to them under the share purchase agreement which effected the sale.

BoI, which bought the Davy Group under a share purchase agreement entered into in 2021, denied the claim.

On Monday, proceedings by BoI firm, BoI Nominee 1 Ltd against Ailmount Investments were admitted on consent to the fast track Commercial Court.

In its legal action BoI claims that under the share purchase agreement Ailmount is obliged to indemnify the bank, and hold it harmless, in relation to losses and other liabilities, including legal claims, specifically in relation to two claims brought against Davy before the sale.

In an affidavit, BoI director Alan Daly said Ailmount provided certain indemnities which meant BoI was entitled to withhold a reasonable estimate of the cost of the outstanding claims from the deferred payment.

Today’s News in 90 seconds – 10th June 2024

There was also a procedure under the share purchase agreement providing for the appointment of a senior counsel to provide an expert opinion on the prospect of success of the claims. Mr Daly said Ailmount had frustrated the process of appointing counsel.

He said Ailmount was paid €74.1m in 2024. Another €15.3m was withheld which he said was a “reasonable good faith estimate” of the amount of certain indemnity claims which have yet to be resolved.

He said that the investors, in their case brought last year, claimed entitlement to payment from BoI in relation to changes to Davy’s regulatory capital requirements for the year ending 2022.

He said Ailmount last month asked the court for permission to amend its case to include the matters now being claimed in the BoI proceedings as well as a stay on the BoI case going ahead until the amendment issue is resolve.

He said the BoI case should be allowed to proceed because the issues within it are complex and if litigated as part of the first (Ailmount) case, this would only serve to materially delay that case.

Ailmount’s solicitor, Karyn Harty of Dentons Ireland LLP, said in a replying affidavit that while her client did not oppose the entry of the BoI case to the commercial list, this was without prejudice to her side’s application to stay the proceedings.

She also said her client’s application last month to amend its proceedings arose because BoI was “in breach of its clear obligations” under the share purchase agreement and there was no lawful basis for withholding the €15.3m payment.

BoI was obliged to, but did not, provide Ailmount with documents and information in relation to its indemnity claims which prevented her client from assessing the validity of those claims, she said.

She also described Mr Daly’s claim that Ailmount had frustrated the process for appointing a senior counsel as “a very serious allegation and is untrue”.

Mr Justice Denis McDonald, after admitting the case to the Commercial Court, put it back to next month for the making of directions in how it should proceed.

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