In November 2004 a mortgage was taken out on Castle Bernard and lands from the IIB Bank, now known as KBC Ireland. Despite the fact that the property was booming under the trade name Kinnitty Castle™ and had so much positive coverage on the media and even though the mortgage was being fully serviced, the bank started to put pressure on the owner towards the end of 2005. They insisted that the property should be sold and the mortgage paid back to them in full. A strange request as business was flourishing.
Although the banks were lending money without question to many during the boom time, it proved difficult to secure another lender in Ireland. Attempts were made to secure investment from overseas in the USA or to arrange a management company in the hope it would appease KBC. Unfortunately, due to the very negative attitude of the Bank, Buena Vista decided that enough was enough and backed away from the property, the project and Ireland. KBC still kept the pressure on to sell even though the mortgage was up to date and as a result Kinnitty Castle™ was eventually put on the market in June 2006. Almost immediately a buyer emerged and a deal was done with the Hanly Group for the amount of € 12.6 million in July 2006. This deal was supposed to close in a matter of weeks. This did not happen and in December 2006 the Hanly Group were having some issues raising the money needed from the bank and were short a significant amount of money.
It seemed that the lending bank was being instructed by a more influential group who perhaps wanted the property for themselves. To avoid this happening an agreement was made to accept the deal of postponing a portion of the payment for an unspecified period of time and take a second charge on the property until the balance was paid. The day before the deal was about to close a call was received from the Hanly Group saying that their bank did not approve the second charge, leaving no security for the balance owed. The advice given by the sellers solicitor was to pull away from the deal and in accordance with the contract for sale conditions, to retain the deposit.
The KBC Bank were paid up to date and due to the circumstances an agreement was requested with the KBC to defer all additional re payments until July 2007, allowing time to get the business back on track. This they eventually agreed upon although they did not confirm their decision to the proprietor until March 2007. Investors and buyers were continuously sought for by the owmer and there were a number of possibilities all of which the bank dismissed. It was as if they wanted the sale to fail. Repayments began again, as agreed in July 2007, interest only. Despite the situation interest payments continued to be made on the loan until the KBC took possession in November 2008.In September 2008 an agreement was made to put the property back on the market in November. It was difficult to have confidence in the auctioneer as it seemed his loyalty was more to the Bank that to the property owner .a This feeling was further verified when the article, KINNITTY CASTLE FEUD appeared on the business section of the Irish Independent on Monday the 10th of November
It was obvious that this was a planted article with the ultimate aim of devaluing the property in the eyes of the public and potential geuine buyers before the planned sale.
“ Kinnitty will now go for sale by public tender on November 27, but two estate agents said the hotel could achieve a greatly reduced price -- between 30 and 50pc less in the current climate -- a price cut of at least €4m “
There were two agents appointed to sell the property however the article did not state that it was the two agents who were selling the property that made the statement. The article was written in such a way as to insinuate that it was them who made the statement. This would have had devastating effect on the sale, had the sale been allowed to go through.
The bank was contacted about this issue and they did not seem concerned, either did the estate agents. The sale was therefore pulled by putting a notice on the Independent the following Monday the 17th of November on the same page, stating that the sale had been postponed due to the damaging article of the previous Monday. This action, which under the circumstances was the correct thing to do, upset the bank to the point that they took possession of the property two days later. The bank was notified explaining why the sale was postponed and to update them on the progress and potential buyers which had been sourced, however that did not seem to make any difference to them.
They took possession on the 19th of November 2008 and set a date to sell the castle less than a month later, on the 12th of December 2008.They were not allowing sufficient time for the sale and it seemed that someone had earmarked the property and was possibly in collusion with the bank.
Back in 2006 when the property was originally put up for by the owner was approached by Pierce Farrell and Ray Byrne who indicated that they would be prepared to pay €7m for the property. Pierce Farrell is the senior partner of Farrell Grant and Sparks who are one of the top accountancy companies in Dublin. Mr Byrne is his partner and operator on a number of hotels which they own together in Ireland, The Wineport in Westmeath, featured in the restaurant programme on RTE. and the Ice Hotel in Sligo.from what we can establish, Mr Byrne is the operator and Mr Farrell provides the finance.
When the castle was repossessed by the KBC Bank Ireland in November 2008, they appointed a receiver, who happened to be the one and only Farrell Grant and Sparks, headed up by Pierce Farrell. Who was at the castle assisting with the organisation after the KBC took possession ?. His partner Ray Byrne. The stage had now been set and the players playing.
At this point the Ryan family immediately took action and sued the Bank for allowing a conflict of interest to occur having appointed a receive whose principle had a personal interest in acquiring the property. The Ryan family also acquired a German buyer willing to buy the property for €10m. Ultimately they ignored the German buyer's and the judge did not see how there was any conflict of interest. They postponed the sale until January 2009 and there was no interested party for the property as the signs of the economy crash had appeared in early 2009.
This is the story to date. They have been in possession since 2008 and eventually tried to sell the property again in November 2013, five years after their last failed attempt. They still have not attained annual sales greater than €1.8 m per annum. At peak Kinnitty Castle™ was doing in excess of €4.0 m per annum and provided up to 70 full and part time jobs. In addition the business supported the local economy in the form of B&B businesses which were established on the back of the success generated by Kinnitty Castle.The situation remains in stalemate.