After two weeks of hearings in the Four Courts in a case brought by HSBC bank against the directors of former livestock export company, TLT International (in receivership), the case has now been adjourned until January 2015.

The case, brought by HSBC against brothers Davide and Paolo Garavelli, had initially been expected to take two weeks but the pace has been slow. During the course of proceedings, Justice Robert Haughton said he expects the case to require a further “four or five days”.

With two full weeks over and a number of crucial witnesses now finished providing evidence and being cross-examined, what do we know from the case thus far?

British-based bank HSBC put TLT International into receivership in November 2013 as the bank did not believe that the company would be able to pay back its debts. The bank also alleges that TLT breached an agreement it had – this is essentially the crux of the case.

In January 2012, HSBC and the Garavellis entered into an agreement regarding the funding of the company. The agreement was essentially a fund which allowed TLT to operate. As a result of this alleged breach, as it was described by the prosecution, HSBC had rights to all existing and future debts of the company.

The agreement is reported to have “worked well” throughout 2012, before running into trouble in 2013 with the Garavellis citing the horsemeat saga as having disrupted trade from Ireland to Italy.

Alleged breach

The bank said that the directors of TLT breached the agreement by issuing credit notes without approval from the bank, using a third party to collect debts (an Italian company called Coget, of which Davide was a director) and having debtors pay into a different bank account to the HSBC one.

This resulted in TLT being put into receivership with accumulated debts, according to the bank, of approximately €8m. In the region of €3m was owed to HSBC and €3m to Irish marts, with the remainder being owed to AIB, individual farmers and other costs.

Counsel for the Garavellis has strongly disputed these alleged claims. It has argued that HSBC did not allow TLT to trade through a difficult period and put the company into receivership too quickly.

Sue Whitehouse, a staff member at HSBC, admitted during cross-examination in the first week of the trial that pressure was put on the Garavellis to sign a letter which confirmed that they had breached the agreement with the bank. Whitehouse admitted that she would have done things differently regarding the signing of the letter as the Garavellis were not advised to get independent legal advice before signing the letter.

The receivership

On the sixth day of sitting, last Thursday, the appointed receiver/manager, Gearoid Costelloe of Grant Thornton, was put under pressure by the Garavellis’ barrister.

It emerged in the course of proceedings that just over €120,000 has been recouped by the receiver, €99,000 of which came in the line of a VAT refund.

Costelloe admitted that this was a “modest” sum but said that the Garavellis had not worked with him to recoup monies – a claim rejected by the two brothers.

It was also revealed that Costelloe has received €150,000 in professional fees.

More to come

While the case has seen some notable and high-profile witnesses, perhaps the most intriguing ones are yet to come.

Sandro Garavelli, the father of Paolo and Davide, is expected to give evidence. It emerged in the course of proceedings last week that the lairage in Westmeath, which TLT used while in existence, is owed by Sandro and not TLT. Gearoid Costelloe still lays claim to the yard and says it should be his to sell as part of the receivership process.

Michael Spellman is the chairman of the national marts committee with ICOS. It is reported that TLT International owe marts in the region of €3m. Some marts are still owed money while it was claimed in court that Sixmilebridge Mart in Clare, which does not fall under the ICOS umbrella, received a payment of €88,000. Sixmilebridge was the only mart to be referred to in evidence given so far.

Davide and Paolo are expected to give evidence. Parts of their witness statements have been read out from time to time during proceedings and from those snippets it is clear that they feel HSBC acted too soon in putting them into receivership.

Despite their company being put into receivership, the Garavellis offered to work with HSBC to collect debt owed to the bank. This deal was rejected by the receiver. There will be further witnesses from HSBC.

Christmas break

The case has been fascinating thus far, albeit slow and laborious at times. The Garavellis have sought to rebut the evidence provided by HSBC during the course of the case so far. The case is finely poised going into the Christmas break. However, prior to the break, the receiver will provide evidence on Thursday and Friday.

While the judge has indicated that another two weeks could be required, the case may last another month.