Limerick investors in failed London scheme to get a fraction of their money back

David Hurley

Reporter:

David Hurley

The personal insolvency arrangement was approved by the High Court in July

The personal insolvency arrangement was approved by the High Court in July

UP to 60 investors who were given personal guarantees by property developer and former Irish rugby team manager Pat Whelan over a failed multi million euro property investment scheme are to receive a tiny fraction of their money back as part of a insolvency arrangement.

It is estimated that each of the investors, including former Ireland and Munster captain Paul O’Connell, will receive an average of just €76 despite having invested a combined €1.5 million.

The group had been asked to invest in a €13.4 million “mezzanine” finance scheme to fund a property development at London’s Earls Court ahead of the London Olympics in 2012.

Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default.

Pat Whelan, who lives at O’Connell Avenue in the city, agreed a personal insolvency arrangement (PIA) with his creditors earlier this year, under which they will be paid dividends of just under €390,000.

According to the PIA, the 67-year-old, who wishes to return to solvency, owed more than €133m when he sought protection.

The largest creditor was the National Assets Management Agency (Nama) , which was owed about €120m. 

The PIA, which was approved by creditors in June and by the High Court in July states that Whelan got into “financial difficulties due to the economic downturn and recession.

“The value of his assets were dramatically reduced during this time and the banks withdrew all of their financial support to his respective companies,” it states.

“Debts began to mount and Patrick was in a position whereby his income had suffered as a direct result and his companies could not discharge the debts as and when they fell due. As a result, his creditors were left with no position but to secure judgements against his properties and since have repossessed all of his assets since to recoup monies owed to them,” it adds.

Secured creditors have taken possession of his assets and the arrangement lists lands at Ardhu, Ennis Road and Clonmacken in Limerick and at Ashford, Co Wicklow, that are in receivership and likely to be sold. The lands are valued at €16.5m.

According to the PIA documents seen by the Limerick Leader, Pat Whelan’s car – an An Audi A4 – was not included as it is “required for work and personal usage”.

His “executive pension policy” which is valued at €1.286 million was also excluded from the PIA as Mr Whelan “does not have access to this pension for the term of the Personal Insolvency Arrangement”.

The PIA also indicated Pat Whelan was to receive a €400,000 loan from a well-known Limerick businessman.

However, it’s not known if that loan actually materialised as proposed in the document.

According to the PIA, Pat Whelan is a director of 15 different companies.

He has no ‘beneficial interest” in 14 of the companies and while he owns a 50% share in John Whelan Project Management Limited, the market value of his shareholding was listed as €1 as the company “has made consecutive losses for two years running”.

A letter sent to the 60 investors by Sweeney McGann Solicitors in recent days confirms that the Personal Insolvency Proposal was approved earlier this year.

It states the total amount payable is €4,851.48 and that the money will be distributed once received.

“We have not received this sum yet and when we do I will divide it out, the amounts are likely to be small,” states the letter.

“I know the final settlement is disappointing but unfortunately there are no more recovery options available in this case,” it adds.

According to the PIA documentation, Pat Whelan’s monthly income in April was €4,814.21. 

A figure of €1,073.05 was proposed, in the PIA, to cover “reasonable living expenses” with the remainder going towards the settlement.

“Patrick has a good salary but he would never be in a position to pay down the amassed debt and he would like to offer a once off lump sum settlement to his creditors in full and final settlement,” states the PIA document.