Sunday 20 August 2017

Treasury cannot debate issues at public expense, NAMA tells court

Tim Healy and Mary Carolan

NAMA does not have the "luxury" of allowing Treasury Holdings, as an insolvent developer, to "indefinitely debate" issues with it at the taxpayers' expense, the High Court was told yesterday.

If Treasury is granted leave to bring a judicial review challenge to NAMA's appointment of receivers over its assets here, the state agency will seek a court order requiring the developer to provide security for the costs of that case, Paul Sreenan, for NAMA, said.

As those costs are likely to amount to several million, NAMA's move to seek security may have an impact on how the Treasury case develops, according to legal sources.

If granted leave, Mr Sreenan also indicated, NAMA will seek a "fortified" undertaking from Treasury for damages in the event of the developer losing any full judicial review proceedings.

Treasury indicated yesterday it was withdrawing its additional application for an injunction restraining the receivers dealing with its assets. However, it is considered unlikely the receivers will take any steps prior to the determination of the leave application.

Yesterday was the fourth day of the hearing before Ms Justice Mary Finlay Geoghegan of the application by Treasury Holdings and 22 related companies for leave to bring a judicial review challenge.

Treasury is disputing decisions made last December and January to call in loans and appoint receivers over Treasury's assets here, including the PricewaterhouseCoopers head office in Spencer Dock and Alto Vetro building on Barrow Street, both in Dublin.

NAMA denies the disputed decisions were made in breach of Treasury's rights to fair procedures or that NAMA acted in "bad faith" concerning the timing of the receivership decision.

In continuing arguments for NAMA yesterday, Mr Sreenan said Treasury had made out no substantial issue concerning its right to be heard, such as entitled it to be granted leave.

Warnings

From September 2011 on, Treasury had had clear indications and warnings from NAMA, that if it did not meet certain requirements, including a strategy to deal with its creditors, NAMA could take steps including the appointment of receivers, counsel said.

There were three explicit warnings to Treasury of the possibility of receivers and it also knew the NAMA board was monitoring the situation, he said.

By December 2011, Treasury had cash reserves of about €4.1m and creditors of about €18m, counsel said. From September 2011 onwards, NAMA and a syndicate of banks sought a credit strategy from Treasury but that was only produced almost two months later on November 23.

NAMA had raised various deficiencies in that strategy with Treasury, deadlines were extended and Treasury was given "every indulgence". On December 7, NAMA was told the Treasury exposure to creditors was €5m higher than a €13m figure earlier provided.

This occurred after a NAMA evaluation process indicated that initial creditor figures did not include accruals and the "constant changing" of creditor figures "caused considerable alarm", he said.

There had to be "an end" to the process at some stage, Mr Sreenan said. "No one can come into court and say they are entitled to an open-ended process, particularly at the expense of the public purse."

In these and other circumstances, the board of NAMA was entitled to take its decision on December 8, 2011, to enforce repayment of loans and to direct its executive to appoint receivers at a time it considered appropriate, he said.

The receivers were appointed on January 25 after expiry of a two-week "standstill agreement" which NAMA agreed with Treasury at Treasury's request, he said.

The hearing resumes on Tuesday.

Irish Independent

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