Agency hasn't worked -- so now the gloves are coming off
NAMA's decision to move against Paddy Kelly marks a new get-tough policy on its part and almost certainly brings the colourful property developer's 45-year career to an ignominious conclusion.
Originally from Co Laois, 67-year old Kelly was the first major developer to admit that the game was up when he told the Commercial Court in March 2009 that his assets exceeded his liabilities and that he might be bankrupt.
Since that admission, the blows have rained down thick and fast upon Kelly, who had an estimated net worth of €200m at the top of the market.
AIB, NIB and ACC are among the banks which have secured High Court judgments against him for unpaid debts.
He has also had his car seized -- not once but twice -- by the Sheriff and has been forced to move out of his palatial Shrewsbury Road, Dublin 4 home and into rather more modest accommodation.
At his peak, Paddy Kelly was involved in more than 50 projects, including the redevelopment of Smithfield in Dublin and several hotels with a combined value of €5bn.
His preferred method of recruiting partners for each of his projects, which was intended to spread the risk, achieved the opposite result.
As his son Simon explains in his recent book, 'Breakfast With Anglo', when Paddy Kelly sought to sell some of his properties to raise desperately needed cash in 2007 and early 2008, his partners refused to agree because they would have had to take a loss.
NAMA is appointing a statutory receiver to Paddy Kelly's seven hotels. These include three properties trading under the Clarion brand, a Marriot, a Maldron and a Days Inn.
The operation of the hotels is not affected by the appointment of the statutory receiver. NAMA has also appointed estate agents Savill to sell off properties owned by Kelly in Smithfield, Blackrock and Clonskeagh.
A statutory receiver is a sort of "super receiver", whose appointment is designed to prevent individual NAMA-participating banks appointing their own competing receivers to the same property. This is the third time that NAMA has appointed a statutory receiver to the assets of a major Irish property developer.
In February, it appointed a statutory receiver to Liam Carroll's sprawling property empire. It has done the same to some of Bernard McNamara's assets. Statutory receivers have also been appointed to the assets of several smaller property developers.
While there will be considerable personal sympathy for Paddy Kelly -- who, almost uniquely amongst major property developers, seems to have had no enemies -- NAMA's tougher approach is long overdue.
It is now almost two years since the former finance minister Brian Lenihan first announced his plans for the setting up of the National Asset Management Agency in his April 2009 emergency Budget.
Since then, events have moved at a glacial pace, with the state "bad bank" signally failing -- so far at least -- to achieve its stated aims of either stabilising the property market or getting the banks lending again.
Two years on, it is now clear that the property market and the banks' balance sheets are in far worse condition than even the most pessimistic observers could have imagined in April 2009.
With virtually all of Ireland's major property developers now hopelessly insolvent, not alone was NAMA's previous softly-softly policy not working, it couldn't possibly work.
As a result, Brendan McDonagh's outfit is going to have to adopt a much tougher approach in its dealings with property developers.
This is going to see NAMA seizing direct control of the assets of many more developers and selling off their assets for whatever it can get.