Developer's finances 'deteriorating'

Developer Bernard McNamara has told the Commercial Court he has “no unencumbered assets” and is unable to pay €62.5 million under a summary judgment ruling against him arising from unpaid loans given for the purchase of the Irish Glass Bottle site at Ringsend.

His company Donatex is also unable to pay summary judgment of €98 million, he said.

Mr McNamara has offered to pay €100,000 per month off the summary judgment sums which Mr Justice Peter Kelly last month ruled are due to a group of private investors procured by Davy stockbrokers to invest in the €412 million purchase of the IGB site.

John Gleeson SC, for the investors, today described the €100,000 offer as “paltry” given the sums owed. An information memo of 2007 from Davy promoting the IGB site investment had described Mr McNamara as a person “of significant net worth” but had cautioned there were no guarantee that would remain the case, he said.

Mr McNamara is no longer a person of signficant net worth given he has no unencumbered assets and the position of himself and his company was getting worse every day, counsel said. His clients were already down €30 million as Donatex had no asset other than the IGB site contract.

Mr Justice Kelly will rule tomorrow whether to grant a stay to Mr McNamara on summary judgment against him and Donatex in the sums of €62.5 million and €98 million respectively. The entering of summary judgment would expose Mr McNamara to claims by other creditors, the court heard.

In a letter read to the judge, solicitors acting for Mr McNamara said “all of the equity in his personal assets has been utilised to support his various businesses and over 1,100 people that those business either employ directly or who earn a livelihood from them”.

The letter said Mr McNamara and Donatex “accept and acknowledge that they are unable to satisfy” the summary judgments pronounced in favour of Jersey-registered company Ringsend Property Ltd (the investors) and added Mr Mcnamara was not “at this time” able to make any substantial payment in satisfaction of the judgment against him.

The letter added the investors would however benefit should Mr McNamara and Donatex win their court proceedings against the Dublin Docklands Development Authority arising from its failure to grant a certificate which would have had the effect of fast-tracking planning permission for the IGB site.

The judge ruled last month the investors, who include businessmen Martin Naughton and Lochlann Quinn, were entitled to the summary judgment orders on grounds the defendants had advanced no arguable defence. He agreed to defer entering judgment pending the hearing of the defendants’ application for a stay.

Martin Hayden SC, for Mr McNamara and Donatex, sought the stay pending his client’s Supreme Court appeal against Mr Justice Kelly’s decision and in light of their proceedings against the DDDA. If his clients won their case against the DDDA, any compensaiton paid to them by the DDDA would go to the investors, Mr Hayden said.

Counsel agreed with the judge the repayment offer of €100,000 monthly was a “bagatelle” given the sums owed but said Mr Mcnamara was putting this sum up “in real money at a very difficult period”.

Mr Gleeson opposed the stay on grounds including a possible delay of up to three years in having the Supreme Court appeal heard and also queried whether the grounds of appeal advanced were arguable. In addition, there was uncertainty as to the outcome of the case against the DDDA, counsel said.

Mr McNamara’s financial position was deteriorating daily and this prejudiced his clients who were effectively being asked to defer their claims for some three years, counsel suggested.

The offer of monthly payment of €100,000 against the monies owed was “paltry” and Mr Hayden’s suggestion the investors would not be prejudiced by delay in having the monies paid was “amazing” given the sums owed, he said. A stay would also tie his clients hands at a time when other creditors would be entitled to move against Mr McNamara.

In exchanges with counsel, the judge said the fact Donatex had been on the strike off list of the Registrar of Companies was not indicative of a well run company. Mr Hayden said Donatex was no longer on that strike of list and was up to date with the making of returns.

The summary judgment application arose over loans by the investors to Donatex towards the purchase of the IGB site and a personal guarantee of Mr McNamara over the loan principal.

The IGB site was bought by a consortium of the DDDA, Mr McNamara, and another developer, Derek Quinlan and the purchase was made by Beebay Ltd. After planning permission was not secured for the development within 30 months of January 2007, the investors claimed entitlement to their monies.

The defendants argued their prospect of securing permission was partially frustrated because of a High Court decision in another case which, they claimed, meant the DDDA had no power to issue the Section 25 certificates in relation to a development with which it was itself involved.