IELCA 15 - Tola Capital Management -v- Linders & Ors.

• Year: 2017
• Decision Date: 05 June 2014

[2017] IELCA 15

THE HIGH COURT 2014 4500 P

BETWEEN TOLA CAPITAL MANAGEMENT LLC PLAINTIFF

AND

JOSEPH LINDERS, PATRICK LINDERS, (AND BY ORDER OF THE COURT MADE ON THE

5TH DAY OF JUNE 2014) LINDERS OF SMITHFIELD LIMITED, EQUIPOINT LIMITED AND

EQUISIDE LIMITED. DEFENDANTS

RULING ON DEFENDANTS' COSTS

1. The Plaintiff sought the following interlocutory injunctive reliefs against the Defendants: –

1) An Order restraining the Defendants from completing a debt purchase agreement with

Ulster Bank in respect of the properties, the subject matter of the proceedings,

otherwise than in trust for the Plaintiff.

2) An Order restraining the Defendants from placing on the market, selling, transferring,

assigning, disposing of, charging or otherwise dealing with the properties the subject

matter of the proceedings save in accordance with the terms of Method A: Loan

Structure of the Binding Option Agreement between the parties dated 6 February 2014.

3) An Order directing the Defendants to provide evidence confirming that the Defendants'

alternative financing for the debt purchase agreement entered into with Ulster Bank

consisted entirely of debt with no third-party equity participation.

2. The Plaintiff is a limited liability company incorporated under the laws of Delaware United

States and has its principal place of business in New York, United States. The Defendants were

sued in their personal capacities.

3. The Defendants wished to enter into an agreement with Ulster Bank to buy back certain loans

which they owed to Ulster Bank and which were secured on properties which either they, or

companies controlled by them, owned. In order to buy back these loans they needed to obtain

finance from alternative financiers. One possible financier was the Plaintiff and, it was the

Defendants' case that the role of the Plaintiff in the renegotiation of the Defendants' refinancing

of the loans with Ulster Bank was that the Plaintiff would provide evidence of alternative funding

to Ulster Bank.

4. It was the Plaintiff's case that the parties entered into a Binding Option Agreement on 6

February 2014. Under the terms of the Option Agreement, the Defendants granted the Plaintiff

an exclusive option to acquire certain properties. The agreement also set out two possible

structures to purchase the properties, the subject of the option, as follows: –

1) Method A – Loan Structure

2) Method B – Partnership Structure.

5. Paragraph 1 of the Option Agreement provided that the first and second named Defendants

would negotiate the purchase of the loans from Ulster Bank in return for a full and final release

by Ulster Bank of all claims over the companies, the individuals and the properties. Tola agreed

to provide the Linders with letters demonstrating proof of funds which the Linders were

authorised to present to the bank in connection with negotiating a price for the purchase of the

loans.

6. Paragraph 2 of the agreement provided that for a period of 30 to 45 days after the date in

which the bank provided written notice of its acceptance of the purchase price, the parties

would negotiate to reach an agreement for the purchase of the properties under the terms of

Method B: Partnership Structure as set out in the agreement.

7. Paragraph 3 of the Option Agreement provided that, in the event that the parties were unable

to reach agreement on the terms of the purchase of the properties under Method B Partnership

Structure, then, "Tola shall have the right, but not the obligation, to purchase the properties

under the terms of Method A loan structure as set out in the agreement." It also provides that

Tola could exercise its option by sending a notice of intent to purchase to the Linders within

seven days of the expiration of the negotiation period.

8. Paragraph 4 of the agreement provided as follows: –

"Notwithstanding the foregoing, the Linders may, within seven days of receipt of the

notice from Tola exercising the option to purchase, elect not to proceed with a purchase

pursuant to the terms of Method A Loan Structure by notice of intent to decline the loan

structure purchase to Tola so long as all of the following conditions are met:

(a) The Linders shall have obtained alternative financing comprised entirely of debt with

no third-party equity participation, sufficient to allow the Linders to effect the purchase

of the loans from Ulster Bank; and

(b) The Linders pay the sum of €500,000 to Tola within 30 days of the Linders' notice to

decline the purchase."

9. The Plaintiff provided the Defendants with letters demonstrating proof of funds and

subsequently the Defendants entered into an agreement with Ulster Bank for the repurchase of

the loans on 23 April 2014. The terms of this agreement were provided to the Plaintiff by the

Defendants. The parties then entered into negotiations to see if they could agree a partnership

structure under the Binding Option Agreement. These negotiations proved inconclusive and on