Treasury to provide security in legal challenge to Nama

INSOLVENT DEVELOPER Treasury Holdings has agreed to provide a sum of €600,000 and charges over four properties in favour of the National Assets Management Agency as security for costs of its challenge to the agency’s decision to call in loans of more than €1 billion and appointing receivers over properties here.

The money and first fixed charges must be provided within two weeks or the developer’s action will be stayed and Nama will have liberty to apply to dismiss it, it was also agreed before the Commercial Court yesterday.

The charges relate to a 50 acre development site at Valverde, Cala Llonga, Ibiza, Spain; a property at St Laurence’s Park, Stillorgan, Dublin; and a total of 20 car parking spaces at Townsend Street and Clanwilliam Terrace in Dublin. The €600,000 is to be lodged to an account in the names of solicitors for both sides.

Given Treasury’s consent to provide that security, an application by Nama for orders requiring the company to provide security for costs, and a fortified undertaking for damages, did not proceed yesterday.

Security for costs had been sought in circumstances where the developer is insolvent with overall debt of some €2.7 billion. Nama acquired some €1.7 billion of its loans in 2010 and the loans called in by it amount to over €1 billion.

After talks yesterday morning between the sides, Ms Justice Mary Finlay Geoghegan was told the issue of security for costs and the application for a fortified undertaking for damages had been resolved. The developer had agreed to provide the cash and charges over properties, plus a fortified undertaking for damages based on those same resources, Paul Sreenan SC, with Cian Ferriter SC, for Nama, said.

Michael Cush SC, for Treasury, confirmed that agreement. He also said the developer was not proceeding with any claims for declarations that would have required the State to continue to be represented in the action and, in those circumstances, the State was struck out as a party to the case. An amended statement of claim would reflect that, counsel said.

Lyndon MacCann SC, for KBC Bank, said his client, which is owed €75 million by Treasury and opposes the developer’s action, intended to remain in the case.

The judge made directions to progress the action to full hearing and said she would deal with any additional pre-trial applications on May 22nd.

Last month, Ms Justice Finlay Geoghegan granted leave to Treasury and 22 related companies to challenge the appointment of the receivers.

Separately, Treasury yesterday said it was “surprised and puzzled” by Nama’s intention to take legal action to reverse the transfer of €20.5 million worth of assets involving an entity called Treasury Asia Investments Ltd (Tail).

It said Tail was a “bona fide transaction”, adding it reached agreement with Nama last year on how it would be treated.

“We remain open to discussing and agreeing the resolution of this issue without the need for a further expensive outing in the courts funded by the taxpayer,” Treasury said.