O’Flynn Group Court Ruling Could Be A Turning Point For Many In The Fight Against The Banks
Today in the High Court Michael O’Flynn won back control of his business from a US based fund that had bought his loans from NAMA. This is the first time such an action has been successful and sets down a marker for future dealings with these companies that have come to Ireland to buy up loan books at vastly reduced prices.
The O’Flynn Group is a Cork based company with a large asset book and a constant high inflow of revenue. Since NAMA took over it’s loans from the original lenders the Group has for years cooperated with NAMA in restructuring while meeting all loan repayments. However since NAMA sold the €1.8 billion loan book to Blackstone for just €1.1 billion Blackstone linked O’Flynn’s personal loans into the corporate structure despite them not being previously linked. It seems that the reason for this move was to trigger a default clause that would allow them to take over the business lock stock and barrel. By claiming insolvency via an unprecedented short notice demand in June to pay up almost the entirety of his personal loans, which were in fact also being met as agreed.
Now doesn’t this to all intents and purposes look like a deliberate ploy by a foreign vulture fund? Coming in on a loan book at a cut price and using the courts to wrest control of a profitable company so it can sell it off for more profit. The judge in the case concluded that Blackstine’s subsidiary Carbon Finance acted not in good faith and deliberately misled the court as to the true situation. Basically they lied in their previous court appearance to get an examiner appointed and turfed out the owners, though it remains a point of contention why the previous judge could have possibly ordered a examiner considering so much necessary information was absent from their claim.
This is a practice that became famed in the 80s as “asset stripping”. This is not the first time this has happened here recently, to businesses large and small, but it is the first time it has been successfully defended, and with the discovery orders given against Blackstone this could be a watershed case in the struggle of profitable Irish businesses against these financial vultures.
More details of the case in this Independent article.
This is an important development for Ireland’s businesses in their fight against what now clearly appears to be the planned asset strip of Ireland through this bank crash, guarantee and bailout, and hopefully we will see more businesses bringing the banks to heal with the help of the courts.
It also opens the up many other questions like:
Why did NAMA sell off a €1.8 billion loan book recently to Blackstone for just €1.1 billion when the O’Flynn Group were profitable and well able to service their €1.8 billion loan repayments to NAMA and hence to the taxpayer. Therefore gifting Blackstone a €700 million windfall that must be carried by the taxpayer?
If Blackstone only paid €1.1 billion for the loan book to become O’Flynn’s banker then how are they entitled to unjust enrichment of another €700 million? NAMA could just as easily written off €700 million to the O’Flynn Group itself, but they didn’t need to do either?
Who benefits and what are the connections here?
TV3 interview outside court here: