Sunday 27 May 2018

Treasury case against NAMA opens in Commercial Court

Tim Healy

AN action by Treasury Holdings aimed at overturning NAMA's decision to call in its loans and appoint receivers over its properties here has opened before the Commercial Court.

Both NAMA and KBC Bank have in recent days served fresh demands for repayment of certain loans made to Treasury companies, the court heard today.

The demands have been served on the guarantors of those loans, including Treasury founders John Ronan and Richard Barrett.

The group, the court previously noted, is insolvent with overall debt of some €2.7bn.

NAMA acquired some €1.7bn of those loans in 2010 and the loans called in by it amounted to over €1bn.

Treasury and 22 related companies secured leave last March for judicial review of the NAMA decisions after Ms Justice Mary Finlay Geoghegan ruled the group had met the necessary threshold of raising "substantial" issues to be tried.

Michael Cush SC, for Treasury, told the judge today there were five central issues before the court, including whether the December 8 decision calling in the loans were public law decisions and breached NAMA's obligations as a public body.

The decision to call in the loans rather than extend credit was at the centre of NAMA's powers under the NAMA Act 2009, he said.

The issues before the court include whether NAMA breached its duty to notify Treasury of the decision to enforce the loans and to give it an opportunity to be heard prior to that decision being taken.

Treasury complains it was not aware at the time of either the NAMA Credit Committee meeting of December 6th 2011, which was advised a creditor payment strategy submitted by Treasury was not acceptable, or of the Board meeting of December 8.

It has also complained that no part of the board decision was communicated to it until a partial communication of January 6th 2012.

The fact the Board had decided to enforce the loan was only communicated after the legal action was taken.

A further issue concerns whether NAMA failed to regard as a relevant consideration the potential availability of an investor/purchase for the loans acquired by NAMA from Treasury.

NAMA and KBC Bank, owed €75m by Treasury, are opposing the proceedings which are expected to run for a week

NAMA, which provided more than €100m working capital to Treasury after acquiring its loans, had expressed serious concerns about issues including its proposed strategy for dealing with creditors and the "TAIL" transaction, under which €20m in shares was transferred by Treasury's Board, when it knew its loans were being transferred to NAMA, via a series of transactions to Treasury founders Richard Barrett and John Ronan in return for €100,000 and an unsecured €20m loan note.

Treasury claims NAMA failed to properly consider proposals from MacQuarie Corporate and Asset Finance Ltd and Hines.

Treasury argued Macquarie had offered a "generous" purchase price of €622m for its loan portfolio while another "more complex" bid from Hines offered "a potential total return" to NAMA and the Spencer Dock banking syndicate of some €600m.

It also claimed there were indications from both parties their bids might be improved upon.

NAMA contended neither proposal involved actual "investment" in Treasury but rather required NAMA to provide the bulk of the finance for Macquarie and Hines to acquire the NAMA loans.

The agency had argued, following reviews by itself and PricewaterhouseCooopers, the proposals were not in the interest of either NAMA or the public but would benefit Treasury's management and shareholders by about €80m over a period of years, plus annual management fees of several million.

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