THE NATIONAL Asset Management Agency is taking a hands-on role in the operation of property developers’ businesses, but its bureaucracy is causing major delays, a leading solicitor has warned London-based Irish accountants.
Saying that “really serious practical difficulties” were emerging, Patricia O’Brien of Cork solicitors PJ O’Driscoll Co said Nama, with a staff of just 100, was insisting on “getting involved in the day-to-day business”, which “is probably not sensible for them”.
“There are delays arising. Credit approval is much, much slower than it would be with banks. There are layers of bureaucracy,” she told a briefing organised by the Chartered Accountants of Ireland London Society.
Nama’s loan documentation was “much more cumbersome than what we have been used to”, though she acknowledged that Nama believed some of the documentation used before was “disgraceful”.
Outlining Nama’s “extraordinary” powers, she said verbal agreements between banks and borrowers were not being honoured by Nama.
Banks had the privilege of disclosing such agreements to Nama, she said: “[But] there are a lot of borrowers out there who feel that the understandings they were operating on were not disclosed to Nama and now Nama is saying that it is not bound by them.”
Meanwhile, Brendan Lenihan, group finance director with O’Flynn Construction, warned London-based accountants: “You can’t be smart with Nama. Don’t do any smart structuring, or transfer things to some Bermudian trust, or whatever. Their powers will go against you and the mood music is so bad [that] it is not to be advised.”
Nama’s negotiations with borrowers on business plans were “being used as a Darwinian to weed out those who add no value from the people who actually not only add value but can actually move things forward”.
However, he warned: “In the end it needs to be a plan that will succeed, rather than a plan that will fail.
“There will be winners and losers from that process. And there must be winners and losers, by definition, because there are losses to take. But there must be survivors, too.
“I am not sure that Nama properly realises that yet. The market is the only mechanism for these loans,” said Mr Lenihan.
