The National Asset Management Agency (Nama) has told the Commercial Court it is "almost reaching ridiculous levels" if the law required it to engage in "endless debate" with Treasury Holdings before deciding to call in loans of €1 billion and appointing receivers to the group's properties here.
At the time Nama decided to call in the Treasury loans late last year, Treasury was "burning up" cash and continuously looking to Nama for more money, Paul Sreenan SC, for the agency said.
Nama, which provided more than €100million working capital to Treasury after acquiring some €1.7billion of its overall €2.7billion debt in 2010, called in the loans after a long process of engagement with Treasury in an effort to agree term sheets, counsel said.
That decision was made in circumstances where Treasury was insolvent, dependent on Nama for money to keep trading, had failed to provide a satisfactory strategy to deal with its creditors and where Nama had considered and rejected "investment" proposals, he outlined to Ms Justice Mary Finlay Geoghegan.
Treasury, counsel added, had also made various attempts go back on a significant agreement with Nama to unwind the controversial TAIL transaction under which €20million in shares was transferred by Treasury's Board, when it knew its loans were being transferred to Nama, via a series of transactions to Treasury founders Richard Barrett and John Ronan for €100,000 and an unsecured €20million loan note.
Additional information provided by Treasury in the period leading up to the calling in of the loans and appointment of receivers only accentuated Nama's concerns about Treasury's strategy to deal with its creditors, Mr Sreenan said.
The commercial landscape had also changed and Treasury, as an insolvent debtor, had no right to engage in endless debate with Nama, Mr Sreenan said.
In its legal challenge to the calling in of its loans, Treasury was essentially arguing the law required the agency to tell Treasury that Nama was thinking of writing a letter to Treasury demanding money that Treasury admitted it owed to the agency, counsel said.
It was "almost reaching ridiculous levels" if Nama, as a statutory body, had to engage in that level of consideration and endless debate, he said. It was clear the agency had given Treasury an opportunity to be heard and Treasury was an experienced developer.
Treasury was also not entitled to take legal action in circumstances where it had a standstill agreement with the agency last January during which Nama had engaged with the proposed investors, he added.
Mr Sreenan was making arguments opposing the action by Treasury Holdings and 22 related companies to the December 2011 decision calling in the loans and a January 2011 decision appointing receivers. Among various claims, Treasury alleges that decision was taken with no notice to it and without giving it a fair and reasonable opportunity to be heard.
Earlier today, in further submissions for Treasury, Michael Cush SC argued a comment at a Nama credit committee meeting warning against "tipping off" Treasury about moves to call in its loans was characteristic of the agency's dealings with the developer up to the decision to call in the loans.
Nama did not want to tip off Treasury about proceeding to enforce the loans because it feared Treasury would seek court protection and the appointment of an examiner, he said.
Mr Cush also disputed arguments by KBC Bank, owed €75million by Treasury, that the Treasury action is pointless because KBC had said it would not agree to any restructuring of the Treasury loans. If Nama had not decided to enforce the Treasury loans, KBC could not have moved to enforce, he argued.
KBC, in a notice served last Friday, has said it will seek an order winding up Treasury Holdings unless it is paid €20m within 21 days of that demand. Nama also issued demands for repayment of €3m each to John Ronan and Richard Barrett in their capacity as guarantor of a €13.5million loan to Treasury.
The case continues.
