A battle for some of the country's best commercial properties is set to intensify after one of Richard Barrett and Johnny Ronan's former ventures failed to repay €370m of property debt that fell due yesterday.
The debt is secured on 16 high-end commercial properties in Dublin and Cork, valued at €270m.
The offices and shopping centres were not caught up in the liquidation of Treasury Holdings, the main Barrett/Ronan property venture last year.
That's because they were used as security for "Opera Finance CMH" an investment vehicle used to borrow against the assets on the bond markets in 2006.
The assets backing the bond were valued at as much as €570m in 2008. They include Bank of Ireland's Dublin headquarters on Mespil Road, Cork's Merchant's Quay shopping centre and Dublin's Stillorgan shopping centre.
The assets are regarded as "prime" commercial assets, which is the part of the property market least affected by the downturn.
Bond holders were told of the failure to pay the loan yesterday.
A "grace period" runs until January 18, when the loans will formally be in default.
The failure to pay the loans means the former owners are now totally sidelined, according to sources involved in the debt structure.
In the short term the failure to pay the debt means control of the situation passes to Eurohypo, the German bank that structured the deal in 2006 and acts as "servicer" of the debt for bondholders. It could call in receivers to sell the portfolio.
Based on current prices a liquidation of the portfolio would mean only the most senior lenders would get repaid. They hold what are known as "A" and "B" tranches of a complex multi-layered debt structure.
However, junior bondholders could challenge a liquidation, based on their contract with Eurohypo because as "servicer" it must manage the structure for all classes of bondholder.
The junior lenders can also vote out the servicer, before it pulls the trigger on a sale.
Some investors see that as a recipe for stalemate.
It has already triggered a battle among lenders for control of the properties, which are more than 99pc occupied and throwing off rents of €24m a year.
That kicked off yesterday as US investor Northwood looked to drive a faster resolution after buying an €85m slice of "junior" debt secured in the same assets in December.
It paid less than 10 cent in the euro for the debt and will be wiped in a fire sale.
Northwood invited other, more senior lenders, for talks on restructuring the loans yesterday.
Northwood wants control of the properties, and is willing to invest to secure a deal – probably by offering to partially repay some debt up front in exchange for lenders extend the term of the remaining borrowings. That's according to a source close to the investor.
A meeting of lenders would also flush out other distressed debt funds that have bought bonds at low-ball prices, with their own view to gaining control of the Irish properties.
Northwood is being advised by London-based real estate specialists Brooklands, which advised NAMA when it sold the junior loans to the US firm.
Eurohypo is being advised by Cairn Capital, another London-based investment bank.
A group of "Class D" junior bondholders has hired specialist law firm Paul Hastings as advisers.
In the meantime they are being managed by Burlington Real Estate, a new company established in November by ex-Treasury Holdings executives including John Bruder.