AIB is in talks to settle a transatlantic court case against a former Boston politician over a deal for a Cork hotel.
Both the bank and Richard Voke, a former Democrat politician who bought the Walter Raleigh Hotel in Youghal in 2005 for almost €2.5 million, have reached an “agreement in principle” to resolve the bank’s claims.
The parties have asked a US court to “adjourn all deadlines” in the case “pending their finalising and executing a written settlement agreement resolving the claims in this action”, according to court filings earlier this month.
AIB began court proceedings in Boston in August to recover damages arising from the alleged failure of Mr Voke to make payments related to the hotel.
The bank provided debt facilities of about €1.6 million as part of the hotel deal, with Mr Voke providing the balance from his own funds and through directors’ loans.
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According to the court papers, Voke Holdings, the company Mr Voke set up to buy the Walter Raleigh, owes AIB more than €2.1 million. However, the company entered liquidation in 2011, so the bank is unlikely to get its money back.
Mr Voke’s guarantee was limited to €200,000. The bank said it had sent him at least five written demands for the money owed, most recently in February.
The Walter Raleigh Hotel, a 41-bed seafront hotel, was put on the market for about €450,000 in 2012. Grace and Nick Ryan, a couple from Meath, bought the hotel and have invested in a complete refurbishment.
Mr Voke, whose ancestors hail from Cork, was a state representative during the 1990s. He was once favourite to be elected speaker of the Massachusetts house of representatives, where he was the Democratic majority leader, before being beaten to the post by a rival, Thomas Finneran.
The case against the former politician is the second time that AIB has taken to the US courts to recover cash in the past few months.
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In July, a Manhattan court ruled that the bank could pursue a $500 million fraud claim against Citigroup.
The case relates to John Rusnak, a rogue trader who ran up a $691 million loss at Allfirst Bank in Baltimore, a former subsidiary of AIB. In the lawsuit, AIB accuses Citigroup of helping the currency trader to build up the loss, which was uncovered in 2002.
The scandal was one of the largest involving rogue trading on record at the time. Rusnak later pleaded guilty to one count of bank fraud and a served a six-year prison term before being released in January 2009.
The case is due to come to trial in January.