NAMA has joined the increasing number of institutions successfully obtaining judgments against individuals in respect of liabilities arising under personal guarantees.

NAMA sought judgment in the Commercial Court against Patrick Shovlin and Patrick and Anthony Fitzpatrick in respect of personal guarantees the three had granted in favour of Bank of Ireland for the liabilities of Landmark Enterprises (now in receivership) in respect of the Beacon South Quarter development in Sandyford.  Bank of Ireland is a participating institution for the purposes of the NAMA legislation.

Proceedings also related to personal guarantees the individuals had given in respect of the part finance of Bank of Ireland’s own headquarters in Baggot Street, Dublin 2, and in respect of funding granted to Deileon Limited. The defendants are directors of both Landmark Enterprises and Deileon Limited.

Press reports note that the Fitzpatricks and Mr Shovlin had successfully negotiated a low “cap” to the personal guarantees they had given in the Beacon South Quarter matter (which had involved a substantial bank loan in sum of €280,000,000), meaning that the bank had recourse to the three individuals for only a very small portion (5%) of the total debt due by Landmark Enterprises, and that this fact raised the eyebrow of Mr Justice Kelly, who questioned the “commercial logic” of the bank in allowing the cap.

A summary judgment of circa €38.5 million against Mr Shovlin and circa €22 million each against the Fitzpatricks was entered in favour of NAMA. Ulster Bank subsequently successfully secured additional judgments against the three.

Earlier this year, Ulster Bank obtained a summary judgment against property developer Eugene O’Neill in respect of a personal guarantee he had given in respect of the debts of his company Apex Estates Limited.   Ulster Bank more recently achieved the same result against Mr O’Neill’s wife, who had given a personal guarantee in respect of the same liabilities, but who had been considered by the court to have an arguable defence on the grounds that she had not taken, nor had she been advised by Ulster Bank to take independent legal advice. Ms O’Neill did not ultimately continue her defence of proceedings.

With the courts appearing increasingly willing to find against personal guarantors, individuals who have entered into such a commitment would do well to review in detail the terms of the personal guarantees under which they are liable.

For more on Personal Guarantees, please click here.