Sunday, October 28, 2007

Cowboy solicitors

AIB has notified three solicitors involved in property development that they must pay up their debts or they will be pursued through the courts.

The biggest bank in the country is preparing to take High Court action against the three practices in order to recover several million euro in borrowings.

The move last week on the law firms marks a further escalation in the property controversy surrounding members of the legal profession and follows the closing down of two legal practices in the last two weeks. In both cases, concerns have centred on mortgages obtained by the solicitors.
The other law firms now subject to action by AIB were uncovered in the past ten days, as the bank carried out a major trawl of its mortgage exposure.

AIB intends to take legal actions over the coming three weeks if it is not repaid in full or provided with immediate guarantees.

All three practices are outside Dublin. In one case, the legal firm has amassed a €13 million debt through a failed property investment.

In the other two cases, AIB is concerned that some properties provided as security for the loans by the solicitors were already mortgaged with other lenders.

Meanwhile, several banks are involved in trying to recover debts accumulated by Thomas Byrne, a solicitor based in Walkinstown in Dublin. Byrne’s whereabouts is not known.

Gardai investigating Byrne’s business dealings are also examining the backgrounds of a small number of his clients who are known to the Gardai.

Several banks are concerned that a number of the houses Byrne purchased in his name could have been on behalf of some clients, who wanted to avoid being linked with the properties.

It now appears that Byrne may have borrowed more than €40 million from institutions including IIB Bank, Irish Nationwide and EBS, on the back of his property deals.

Several banks have now told their staff to insist that solicitors do not represent themselves in property transactions.

Further changes to the current guidelines are expected to emerge in the coming weeks, as the institutions analyse their lending procedures.

The fallout from the collapse of the legal practice of Michael Lynn will also continue in court this week. First Active and Allied Irish Bank will tomorrow petition the High Court to have their cases against Lynn admitted to the Commercial Court in an effort to speed up the process.

The Commercial court is a division within the High Court that fast tracks large business disputes.

Permanent TSB also intends to make an application in relation to Lynn tomorrow.

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