Wednesday 13 November 2019

UK judge dismisses attempt to curtail NAMA's reach

John Mulligan

A legal attempt to prevent the National Asset Management Agency (NAMA) from exercising its powers in Britain has been dismissed by a High Court judge in London.

Had the action been successful the outcome would have been hugely damaging for NAMA and the participating financial institutions. Just over a quarter, or €19bn, of the €71.2bn face value loans acquired by NAMA so far are related to assets in the UK.

Wembley-based plant hire group Carey Group, which posted turnover of £175m (€201m) and a £1.8m (€2.1m) operating profit in its last financial year, had sought to prevent NAMA from acquiring about €50m in lending facilities the company had with Allied Irish Bank's UK-based arm.

The firm argued that such a move would constitute an unlawful exercise within British jurisdiction of sovereign power by a foreign government.

The company also alleged that transfer of its facilities to NAMA would result in a breach of contract on behalf of AIB UK.

But Justice Michael Briggs of the Chancery Division of London's High Court has said that no contractual basis from restraining AIB UK from complying with NAMA's demand that it transfer its rights under the lending facilities to the agency had been disclosed. He added that AIB UK had willingly agreed to transfer those facilities to NAMA.

"In my judgment there is no arguable basis for an assertion that NAMA would be infringing any right of the claimants in demanding or requesting that AIB UK comply with the duties which that statutory scheme imposes on a participating institution," said Justice Briggs.

He also dismissed the company's allegation that transfer of its facilities to NAMA would result in a breach of contract by AIB UK.

Carey Group, which also operates in Ireland and also trades as PJ Carey, said it had been a customer of AIB UK for 40 years. The court was told that its debt to the bank was in "no sense toxic".

The company had five term loans with total values of £7.7m (€8.87m) and €23m, five performance bond facilities worth a total of £4.5m, an asset finance facility for £4.5m, an overdraft facility of £8.47m that will be reduced to just under £7m at the end of this month, and a guarantee facility of £500,000.

The company also had claimed that NAMA would not be able to provide the firm with an overdraft facility subsequent to loan facilities being transferred to the agency.

The court ruled that AIB UK was within its rights to terminate an overdraft facility prior to transferring facilities to NAMA.

Irish Independent

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