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BlackBee founder David O'Shea threatens High Court action over liquidators' handling of Blackrock Office Bond II assets before investors access ICCL compensation.
David O'Shea, founder of the Cork-based investment group BlackBee, has warned he will apply to the High Court for leave to seek a judicial review if the Investor Compensation Company DAC ( ICCL) proceeds with compensating investors in a property-backed bond without exhausting all available assets. The warning came in a letter to the ICCL last week, according to details emerging from the liquidation of several BlackBee entities over the past three years.
Liquidators Reject O'Shea's Claims
Luke Charleton and Alan Large of EY, the liquidators of the various BlackBee entities, said in a statement that they reject outright the contents of O'Shea's letter. Last month, they wrote to investors in Blackrock Office Bond II, stating that they were entitled to compensation from the ICCL. The bond raised over 11 million euros in 2019 to buy Block 2 at Blackrock Business Park in south County Dublin. It was the first BlackBee investment to be classified as a so-called compensatable event.
The maximum payout for ICCL-eligible claims is 90 per cent of the compensatable loss, up to a cap of 20,000 euros. The liquidators reported in letters to investors that a total compensatable loss of 4.25 million euros had occurred. This comprised loan repayments and interest received by City Quarter Capital II, a bond issuance vehicle within the BlackBee group, that was not made available for distribution to the Blackrock Office Bond II investors.
Assets and Collateral in Dispute
O'Shea noted in his letter to the ICCL that the property had been sold by a receiver for 8.75 million euros in August 2024, resulting in a net 5.88 million euros being transferred to the liquidators. That was after a loan from a property company associated with wealth manager Warren Private, called Futuredale, was repaid.
However, O'Shea claimed that Blackrock Office Bond II had recourse to between 3 million and 4.5 million euros of additional super senior collateral held by City Quarter Capital II, to protect investors in the product against property shortfalls. This was secured against a portfolio of unencumbered healthcare properties, which a receiver has been actively selling down, he said.
He stated that the combination of physical sale proceeds of 5.878 million euros and additional assets of 3 million to 4.5 million euros yields a recovery in the range of 80 to 95 per cent of notional noteholder capital. O'Shea argued that the ICCL should not be paying compensation while millions of euros in registered collateral sit uncollected in the hands of an active receiver.
Data System and High Court Examination
O'Shea also alleged that BlackBee's core IT system, Hive, which held investment records, had been decommissioned after BlackBee Investments, the group's Central Bank-regulated entity, went into liquidation in May 2023. He said this led to data corruption until Hive was recommissioned last September.
O'Shea and Carl Dillon, an accountant and adviser to O'Shea, will be examined in early November in the High Court on the affairs of the BlackBee entities in liquidation. BlackBee Investments had about 180 million euros of client assets when it was put into liquidation.
EY said that the joint liquidators have returned over 30 million euros to investors to date. Investors are informed directly of the status of their investment. The joint liquidators will continue to work with asset owners, other receivers and liquidators to realise assets and to return funds to investors, EY added.
Blackbee David O'shea ICCL Blackrock Office Bond II EY City Quarter Capital II High Court
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