Grehans can't pay €300m each and blame NAMA for cheap sale of assets
RAY Grehan has said that he and his brother Danny are not in a position to pay the €300m they each owe NAMA.
The brothers, who moved to the UK six months ago to start another business, will consider all options for the future. This could include filing for bankruptcy in Britain, he said.
The brothers, with addresses at Bateman's Row, Shoreditch, London, and Prince's Park Parade, Hayes, Middlesex, consented to the judgments being entered against them at the Commercial Court by Mr Justice Peter Kelly yesterday.
A barrister for the developers said that given the extremely large sums involved, they were anxious to take legal advice and had decided the "better course" was to consent to judgment despite having "genuine concerns" in relation to the sums sought.
Ray Grehan told the Irish Independent that the brothers were "disappointed" at the outcome.
He was also highly critical of NAMA, saying its actions against them were not in the taxpayers' best interest.
"We will have to take it on the chin, pick ourselves up and carry on," he said.
Now that the Grehans have agreed to the massive judgments against them, NAMA can pursue them to take their assets. The bad bank can seize valuable properties and assets they own.
If they declare bankruptcy in the UK, which is a shorter process than here, NAMA would have a fight on its hands to recover monies from them and would join the other creditors. It could also object to their bankruptcy application and to them being discharged from it after a year.
The brothers gave personal guarantees to lenders for loans taken out by their development company, Glenkerrin Homes, and for personal borrowings that amount to €49m which triggered this court action.
NAMA did not comment on the case yesterday. Earlier this week it secured a court order to have Glenkerrin Homes and another company wound up.
The Grehans must provide a statement of the companies' affairs to the High Court next month. Should they seek bankruptcy in the UK, NAMA will be amongst their creditors.
The brothers had built up a portfolio of properties in Ireland and the UK, including a new tower next to Canary Wharf. Their highest-profile deal in Ireland saw them pay €171m -- a staggering €84m an acre -- for the former Veterinary College in Ballsbridge in 2005.
For many years the Galway-born brothers' Glenkerrin Homes was a major house builder in Ireland.
Mr Grehan said NAMA sold three of its UK properties recently for "€50m less" than it had agreed to sell them. This shows its "lack of expertise" in managing valuable properties for the benefit of taxpayers he said.
"This is a major issue for the Government," Mr Grehan said.
The NAMA claim arose on foot of personal guarantees they gave to AIB for personal and company loans that include Mr Grehan's personal borrowings of €27m and his brother's €22m worth of personal loans.
The Grehans have been on a collision course with NAMA for many months. They initially signed a memorandum of understanding with the agency that would have allowed them to continue running the company with a view to paying off their debts in the longer term.
But tensions emerged when NAMA wanted to appoint former Bank of Scotland executive Harry Slowey as a non-executive chairman of their company and they objected.
NAMA subsequently moved to appoint a receiver to their companies which the Grehans challenged in court. NAMA ultimately won the day.
A barrister for the developers told the court that given the extremely large sums involved, they were anxious to take legal advice and had decided the "better course" was to consent to judgment.
The Grehans previously argued that AIB had loaned substantial monies on short-term facilities in the knowledge they could not be repaid in the short term. It was argued that AIB wanted to lend on short terms so as to avoid the due diligence required for more formal loans and the totality of the relationship with the bank should be examined.