THERE is a "fundamental illegality" at the heart of the position adopted by NAMA in a dispute over the appointment of receivers to a Kildare hotel and leisure centre owned by companies of developers Ray and Danny Grehan, the High Court was told yesterday.
NAMA has appointed receivers to run the Glenroyal Hotel and Leisure Centre in Maynooth when it was not entitled to do so because, while there was a mortgage over the building, lands and hotel liquor licence, there was no charge over the business itself, Mark Sanfey, for the Grehan companies, said.
The Grehan companies, Glenkerrin Properties and Glenroyal Leisure, are seeking orders from the court restraining NAMA and receivers Paul McCann and Michael McAteer from acting or purporting to act as receivers of the business, including over its undertakings, custom, goodwill, fixtures, fittings, stock, bank accounts and book debts.
They also want the court to compel NAMA to instruct Mr McCann and Mr McAteer to desist from acting or purporting to act as receivers or managers of the business.
NAMA and the receivers are opposing the action and say if the plaintiffs are granted the orders sought, it will undermine the value of the business.
The companies claim the receivers appear to be contemplating selling the businesses but have not consulted at all with the directors of the companies about it.
They also claim there was no security over the businesses of the hotel and leisure centre permitting NAMA to appoint a statutory receiver or receiver/ manager and say NAMA was so informed by solicitors for the companies on May 3 last.
It is claimed that NAMA appointed the receivers on the security allegedly provided by the two companies to AIB under a mortgage deed of December 2002, which was later taken over by NAMA.
There was no power under that deed to appoint the receivers and their appointment is invalid, the companies claim.
In an affidavit from Mr McAteer, for the joint receivers, he said they accepted the receivership extended only to the mortgage deeds and the hotel liquor licence.
However, the reality was they were entitled to take control of the premises.
If the orders being sought by the companies were granted, this would lead to the immediate cessation of the business and undermine the value of the property, Mr McAteer said.
It was not in the interests of the plaintiffs or the defendants that this should happen, he added.
The case continues.