A DEVELOPER is threatening to derail NAMA with a legal challenge to the way it operates.
The urgent case taken by Paddy McKillen could have massive implications for the Irish economy and how the Government's bad bank is perceived abroad.
Mr McKillen is set to argue that €80m loans held by him and his companies should not be transferred to the NAMA -- because he is repaying them in full.
He denies that he is mounting "a full-frontal attack" on NAMA but wants the courts to declare that the definition of eligible assets used in the act is unconstitutional.
However, the Department of Finance is already arguing that if NAMA's operation is undermined it will have knock on effects for the cost of Government borrowing and, ultimately, cause unemployment.
Papers submitted by the Department to the High Court yesterday say that Mr McKillen's landmark action presents a "very real threat" to the "vital work" of NAMA.
The developer is best known for his redevelopment of a hospital on Jervis Street in Dublin city centre, which he turned into the Jervis Street Shopping Centre.
He lives in Foxrock in South County Dublin and hold a large stake in the Maybourne Hotel Group in London.
The hotel company owns the five-star Claridge's, Connaught and Berkeley hotels in London.
The Commercial Court has fast-tracked his case which will begin in full on October 12. It is expected to last four days.
Mr McKillen claims the €80m credit facilities from Bank of Ireland (BoI) are "fully performing", not impaired, and there is no default on repayments. The transfer of the loans would have a "drastic and significantly detrimental" impact on his business and property rights, he says.
Mr McKillen is seeking a declaration that parts of the act under which NAMA operates are unconstitutional.
However, the State will argue that the NAMA Act 2009 provides for the agency to take non-impaired loans and that this is "explicitly recognised" by the European Commission.
It says NAMA must take such loans to achieve its purpose.