Wednesday 21 March 2018

It's becoming increasingly difficult to explain how the 'bad bank' Nama is still standing


IF "it's the little things that trip you up", as former Taoiseach Albert Reynolds declared when his government fell, it's becoming increasingly difficult to explain how Nama is still standing given its record. Here the Sunday Independent details just a selection of the bad bank's most recent misadventures.

It was December 2009 when Nama's interim team oversaw the transfer of €2.1bn of Belfast-born property investor Paddy McKillen's loans on to its books. Unfortunately for Nama, the transaction took place before it was formally established on December 21, leaving the way clear for Mr McKillen to argue successfully in the Supreme Court in February 2011 that the transfer had no legal basis.

Last July saw the high-profile legal tussle between Nama and Mr McKillen back in the news with the Supreme Court awarding costs of several million to the businessman.

Immediately prior to the announcement, lawyers for Mr McKillen said they had received a letter from Nama informing them of its decision not to acquire the loans which had been at the centre of the legal battle between them.

December 2011 saw Nama reach a settlement with developer David Daly and his family. The Dalys had taken a case against Nama three months earlier after it sought the immediate repayment of €457m in loans from them.

Then 2012 got off to a bad start for Nama with the news that Glenkerrin Homes chief Ray Grehan had escaped the "Nama noose" as he described it by declaring bankruptcy in London in the dying days of 2011. Exactly one week later, Ray's brother Danny followed his lead and was declared bankrupt in the UK too.

Notwithstanding the €600m in judgements Nama has secured against them in the courts here, the Grehans will have a clean bill of financial health by the end of this year.

On February 3 last, Nama came away from the High Court in London having had its nose bloodied yet again by Mr McKillen. This time, the State's 'bad bank' was found to have overreached itself by selling €800m in bank loans that the businessman had on the five-star Maybourne Hotel Group in London.

While the ruling was on a preliminary issue, informed observers believe Mr McKillen could very well succeed in having Nama's €800m sale of loans associated with the Connaught, Berkeley and Claridges to the Barclay Brothers overturned when the case gets under way properly next month.

Some 10 days ago, Nama was back in the news for all the wrong reasons yet again, after Ernst & Young, whom it had appointed as an administrator jointly with Lloyds Banking Group to the Battersea Power Station in London, lodged an objection to a planning application from Sean Mulryan's Ballymore Group on its adjoining site at Nine Elms.

In voicing its objections, the administrator claimed that Ballymore's plans, if approved, would damage the potential value it could realise from the sale of the Battersea Power Station site, below.

While those objections may have made sense from the point of view of the administrator's efforts to preserve the value of Battersea, they hardly made sense for Nama given that Ballymore still owes it in the region of €750m.

Thankfully for Ballymore and for Nama, Wandsworth Council gave the go-ahead to the Nine Elms plan last Thursday night, leaving the way clear for at least some of that money to be repaid.

Sunday Independent

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