Liquidation loophole puts Nama in disarray
Legislation makes no provision for developers who go into receivership
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THE future of the National Asset Management Agency (Nama) was last night thrown into disarray after it emerged that legislation for the so-called 'bad bank' does not appear to have any provision to deal with developers who go into receivership or liquidation prior to the agency's establishment.
The lacuna in the Government's plan only emerged in the aftermath of Mr Justice Peter Kelly's decision last Friday afternoon to deny the application of developer Liam Carroll to place six of the companies in his Zoe group into examinership.
Mr Carroll, who is one of the State's biggest developers with estimated borrowings of €2bn, had sought the court's protection after ACCBank moved to recover €136m it is owed for loans on development land and sites.
While Mr Justice Kelly acceded to a request from Mr Carroll's lawyers to put a stay on his refusal, pending the outcome of an appeal to the Supreme Court on Tuesday, there appeared to be some confusion at Government level in relation to the glaring omission from the Nama draft legislation.
A Department of Finance spokesman insisted that loans which were already the subject of the receivership or liquidation process would not be taken over by Nama -- but the man who devised the scheme seemed to hold a different view.
ANALYSIS, Pages 14 20-23, 28, 36
Speaking on RTE radio yesterday, economist Dr Peter Bacon said: "The first question is whether the Supreme Court will uphold the decision of the High Court or not. Assuming it does, I suppose what will happen is that a receiver would be appointed on behalf of the banks. Of course, Nama is going to take the place of the banks. My guess would be if a receiver is appointed, he would be dealing with Nama."
Asked if this would happen despite the fact that ACCBank was not covered by Nama, Dr Bacon added: "You must remember what's going to happen. Nama is taking the position of the banks with respect to land and development loans so I think Nama would be stepping into the shoes of [the banks].
"So why should it be different in this instance? There are more banks involved than ACC."
And while no reference is made to the treatment by Nama of cases where a developer's business is already in receivership or liquidation in the 136 pages of draft legislation published by the Department of Finance last Thursday, it remains unclear if that omission was merely an oversight, or intended.
Speaking to the Sunday Independent, one legal expert said: "It could well be something that will be appended to the legislation before it is passed into law."
Meanwhile, Defence Minister Willie O'Dea has confirmed that developers' homes offered as part collateral on bank loans could yet be seized by Nama.
Speaking to the Sunday Independent, Mr O'Dea said: "In cases where developers have given their homes as part collateral, Nama will automatically step into the shoes of the banks, gaining the right to take possession of those properties where they see fit."
The Defence Minister added, however, that this could only happen where the developer's spouse had consented to the family home being offered as part collateral.
- RONALD QUINLAN
