SKETCH: The court was so packed yesterday that the judge said she would not mind if people sat on the floor
THERE WAS standing room only in Court 14 yesterday as Michael Cush, senior counsel for Treasury Holdings, began to plead the property developer’s case for a judicial review of Nama’s decision last month to call in its loans.
Ms Justice Mary Finlay Geoghegan began by apologising for the lack of seating and added that she wouldn’t take “umbrage” at people sitting on the floor.
Treasury’s managing director John Bruder lasted on his feet for about half an hour before exiting stage left. Treasury’s owners Richard Barrett and Johnny Ronan were not in court.
Mr Cush argued there was an “absence of fair procedures” in Nama’s decision to proceed to enforcement with Treasury and that his client had a “right to be heard”.
Treasury’s senior management argues that Nama gave it the silent treatment from early December 2011 onwards before calling in its loans a month later, thus frustrating genuine attempts by the developer to secure an external investor for its portfolio of Irish assets. Mr Cush said Treasury and Nama were agreed that the developer was “balance sheet insolvent”.
Mr Cush largely had the floor to himself as he outlined Treasury’s case for judicial review, which he suggested might be heard around Easter.
Most of the morning was dedicated to technical issues relating to previous cases involving Nama and Irish property developers, including David Daly and Paddy McKillen.
This might have been behind the thinner crowd post lunch. That’s when we got into the meat of the issue with Mr Cush giving air to Mr Bruder’s affidavit.
According to Mr Bruder, Nama’s decision to issue demands to Treasury for repayment of its loans on January 10th and 11th “came as a complete surprise”.
Treasury oversees the activities of 197 Irish registered entities and 44 none-Irish ones. Not all are affected by the Nama action.
The case yesterday relates to about €732 million worth of Treasury loans transferred to Nama in 2010, according to Mr Bruder’s affidavit.
Following the transfer of its loans, Treasury submitted a 360-page business plan to Nama for approval on May 4th 2010.
After months of negotiations, Nama and Treasury signed a memorandum of understanding on December 13th 2010. This provided for the phased pay down of the debt from the start of 2011 to the end of 2017.
In July 2010, Treasury presented a proposal to Nama from US real-estate group CIM, involving a price of €805 million being applied to Treasury’s entire Nama debt, with an upfront payment of €75 million.
The deal was due to be announced in March 2011 but collapsed at the last minute when Nama got windy about a share transaction involving Treasury Asian Investments Ltd (Tail).
Tail was owned by Mr Barrett and Mr Ronan and proposed to buy Treasury’s holding in Treasury China Trust, which had no borrowings in Nama. CIM pulled the plug on the deal.
Fast forward to January 2012, when Nama called in its loans. On January 11th, Nama agreed to a two-week standstill arrangement.
Treasury put forward separate investment proposals from Macquarie Corporate and Asset Finance Ltd, and Hines. These were rejected by Nama, which would have been required to make vendor financing available to the acquirers equivalent to 88 per cent of the consideration.
Mr Cush said Macquarie and Hines were willing to improve their offers. Mr Bruder’s affidavit also claims Nama dragged its feet over redundancies at Treasury. The impact on staff morale was “extremely damaging”, he said.
He also claimed that Nama delayed payments to certain suppliers and creditors and that its actions have threatened a potentially lucrative contract with BNY Mellon in Spencer Dock.
Nama has largely kept its powder dry. Counsel for the agency will get a chance to rebut Treasury’s claims either later this afternoon or tomorrow morning. This should spice up proceedings and lift the lid, finally, on why Nama called in Treasury’s loans in such dramatic fashion.
