AG urges Supreme Court to uphold McKillen case ruling

THE ATTORNEY General has urged the Supreme Court to uphold a High Court decision clearing the way for the National Assets Management Agency (Nama) to acquire some €2.1 billion in loans to property investor Paddy McKillen and his companies.

The attorney, Mr Paul Gallagher, said the banks who loaned those monies had volunteered to go into Nama and were entitled to assign the McKillen loans to the agency without his consent. In entering loan agreements with those banks, Mr McKillen had already agreed to allow the banks assign the loans to any party it chose, he added.

While Anglo Irish Bank chief executive Mike Aynsley had said the bank wanted to keep the McKillen loans, that followed Anglo’s voluntary decision to go into Nama which would take over the rights and obligations of the bank regarding the loans “and no more”, Mr Gallagher said.

Nama was facing a “mammoth task” which had to be completed as quickly as possible, he added. Its task was to remove the riskiest assets from the banks’ balance sheets so as to remove uncertainty about their recapitalisation requirements.

Nama was intended to deal with a situation where the banks “had not managed their relationships with borrowers and were over exposed” and, in those circumstances, the scheme had to be “as broad as possible”, he said.

The Nama Act was designed to exclude any interest personal to a borrower and Nama was not obliged to have regard to considerations relevant to any borrower, Mr Gallagher said. The Act gave no right to a borrower to make representations to Nama whether to acquire loans or not.

Mr McKillen’s claims about entitlement to relationships with his banks had to be seen in the context that the banks only have those relationships because they are being supported by the State, he added. The idea that, absent Nama, Mr McKillen could maintain his relationship with Anglo was “academic” as Anglo was now, in large part, “a recovery vehicle”.

The attorney was outlining arguments for Nama and the State opposing the appeal by Mr McKillen and 15 of his companies against the dismissal by a three-judge High Court last month of their challenge to the transfer to Nama of their Bank of Ireland loans. The appeal, being heard by a seven-judge Supreme Court, has implications for other loans held by the applicants with other participating financial institutions in Nama. The appeal continues.