Action to wind up Treasury begins
Treasury Holdings and 15 related companies are wholly insolvent and should be wound up, lawyers for KBC bank told the High Court heard today.
The bank which claims it is owed more than €70m by Treasury arising out of loans advanced for the development of the Spencer Dock project in Dublin has petitioned the Court to have Treasury and the other companies wound up and that insolvency practitioner David Carson be appointed as liquidator.
Both Treasury and the related firms have opposed KBC’s application. They have argued that if liquidated 300 jobs in Ireland, plus an additional 100 jobs internationally, will be lost.
At today’s sitting of the High Court Mr Justice Brian McGovern was told that US multinational financier Morgan Stanley had tendered a proposal to KBC to take over the loans.
That investment proposal would result in the bank getting a better price than the market value for Treasury’s assets if the company was wound up, the Court heard.
However Lyndon MacCann SC for KBC said the bank has rejected the Morgan Stanley proposal, on the basis that it “did not make commercial sense,” from KBC’s perspective.
Counsel said that last month the High Court dismissed Treasury’s challenge to the National Asset Management Agency’s decision to call in more than €1 billion of its loans and to appoint receivers over its properties in Ireland.
Ms Justice Mary Finlay Geoghegan found that a so-called standstill agreement between the two parties made in January - under which Treasury agreed not to take legal action against NAMA - effectively ending Treasury’s right to seek a judicial review of NAMA’s decision. Treasury intends to appeal that ruling to the Supreme Court.
Following that judgement KBC, which was a notice party to the proceedings, made a demand for payment on the developers and 15 related companies.
Mr MacCann said his client was part of a banking syndicate that extended loans of €270m to Treasury Holdings and related companies for the Spencer Dock project. KBC provided 25 per cent of the total amount borrowed, counsel added.
Those loans were long overdue and counsel said his client was entitled to take steps in order to get back the money it was owed. Counsel rejected claims that it was not entitled to petition the court to have the firms wound up.
Also the company was not entitled to seek to have the matter adjourned given Morgan Stanley’s offer, which counsel said did not make commercial sense to the bank and had been refused. Counsel said the request for an adjournment of the petition was “simply asking the court to allow Treasury trade while wholly insolvent.”
Counsel also rejected what seem to be Treasury’s suggestion that it has an ulterior motive in seeking to have the companies wound up.
KBC was attempting to recover monies it had loaned to companies that are unable to pay its debts, which it is entitled to do, counsel added.
In reply Michael Collins SC for Treasury said that while it is accepted the companies are insolvent and the money was due and owing KBC is not entitled to make the application as it is a minority party of the syndicate.
Counsel said that in the alternative the court should use its discretion to adjourn the winding up application.
Counsel added that KBC had not shown to the court that it would suffer any prejudice if the application was adjourned in order for it to allow talks with a potential investor such as Morgan Stanley.
Counsel added that the KBC’s motive in having a liquidator appointed, who would assume the role of the firm’s directors and management, was to prevent Treasury from pursing its appeal in the Supreme Court against Ms Justice Finlay Geoghegan’s judgement.
As well as Treasury Holdings itself KBC is further seeking to have related companies including Spencer Dock National Convention Centre Hotel, Spencer Dock Development Company, Faxgore Ltd, Querida Ireland Holdings Ltd, and Robheat Ltd wound up.
The hearing continues, and is expected to conclude tomorrow.