McKillen Jnr Faces Financial Threats as RELM Seeks New Loan Terms

The financial landscape for businessman Patrick McKillen Jnr has become precarious, as a leading finance group has allegedly threatened to collapse his property companies unless he agrees to new loan agreements. This situation unfolded during proceedings in the Commercial Court, where Paul Dowling, the chief executive officer of Real Estate Loan Management (RELM) Ltd, reportedly made explicit threats to appoint receivers over McKillen’s businesses.

On March 15, 2024, Mr. Justice Mark Sanfey accepted the case brought by McKillen and his companies into the fast track commercial list, following an application from Jarlath Ryan SC, who represents the plaintiffs. The defendant firms, including RELM and joint receivers Ken Fennell and Brendan O’Reilly, consented to the case being fast-tracked. However, it was clarified that this consent should not be seen as an admission of the allegations made by McKillen.

In his affidavit, McKillen described the plaintiff companies as special purpose vehicles that primarily engage in borrowing from RELM, owning properties, and leasing them to tenant companies. He noted that the post-pandemic economic climate has led to significant increases in interest rates, which were implemented by the Central Bank. This rise has adversely affected the loan interest rates between RELM and McKillen’s companies.

McKillen indicated that Dowling and RELM may be under pressure from their senior lenders, specifically Bawag Group AG and its owner, Avenue Capital. He asserted that this pressure could potentially breach their lending covenants, which require RELM to secure loans adequately, particularly those extended to the plaintiffs.

The situation escalated when Dowling reportedly approached McKillen seeking amendments to the contractual documents. McKillen refused these requests, believing they would harm his companies. Following this refusal, Dowling allegedly began making threats to collapse the group of companies unless steps were taken to improve RELM’s position.

According to McKillen’s affidavit, Dowling’s threats included the appointment of receivers over the borrower companies. He claimed that Dowling leveraged his knowledge of other commercial projects pursued by McKillen’s group to coerce compliance with the proposed variations to the loan agreements and leases. This included knowledge of McKillen’s attempts to sell hotel assets, which Dowling allegedly used as leverage.

Under these circumstances, some deeds of variation were reportedly entered into, influenced by what McKillen describes as threats, coercion, and undue influence from the RELM representatives. He also noted that several tenant companies have initiated legal proceedings against the joint receivers concerning the validity and enforceability of the leases and deeds of variation.

McKillen is now seeking declarations from the court asserting that the deeds of variation are null and void. He is also pursuing damages for alleged duress, coercion, and misrepresentation, arguing that any excess payments resulting from these variations should grant his side an indemnity against claims made by the tenant companies.

As this case unfolds, the implications for McKillen’s businesses and the broader financial landscape remain to be seen, as they navigate the complexities of loan agreements and the pressures from financial institutions.