June 27 (Bloomberg) -- David and Frederick Barclay won a ruling in a dispute with Irish property developer Patrick McKillen involving a 660 million-pound ($1 billion) debt transfer that allowed the billionaire brothers to take over three luxury London hotels.
Judge David Neuberger in London said in a ruling today that the transfer of the debt by Ireland’s National Asset Management Agency to a holding company controlled by the Barclays, Maybourne Finance Ltd., last year was proper.
McKillen is suing the Barclays and companies they control over their takeover of Coroin Ltd.’s Maybourne Hotels affiliate, which owns the Berkeley, Claridge’s and Connaught hotels. McKillen holds 36 percent of the hotel company and is seeking a judgment that he has the right to buy the remaining shares.
Two Irish banks loaned 800 million euros ($1 billion) to fund the acquisition of the hotels in 2005. Ireland’s National Asset Management Agency, the country’s so-called bad bank, acquired the loans to Coroin from the banks in 2010 and later sold the debt to the Barclays, owners of London’s Ritz Hotel and Daily Telegraph newspaper.
McKillen contended that NAMA exceeded its authority when it sold the loans to the Barclays. Neuberger overturned a lower court ruling in McKillen’s favor and ruled the transfer made Maybourne Finance Coroin’s lender.
The ruling today “is a key moment because it confirms that MFL is the lender to Coroin,” said Marco Compagnoni, a lawyer for the Barclays, in a phone interview today. “It is fundamental to Coroin and who it has to deal with going forward.”
Neuberger denied McKillen permission to appeal the decision to the U.K Supreme Court.
“The judgment today is a small part of the main unfair prejudice and conspiracy proceedings in the High Court and does not lead to the automatic strike out of any other aspects of Mr. McKillen’s claims,” said Breda Keena, a spokeswoman for McKillen, in an e-mailed statement.
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