KBC BANK Ireland has served notice it will seek to wind up troubled developer Treasury Holdings if €20 million is not repaid later this month under the company’s guarantee of loans which remain unpaid, the Commercial Court heard yesterday.

KBC says the court should dismiss Treasury’s case as pointless.

Nama has also issued repayment demands to Treasury founders Richard Barrett and Johnny Ronan for €3 million each arising from guarantees of a €13.5 million loan to Treasury.

The demands were issued recently, before the hearing of the developer’s legal challenge to overturn Nama’s decision to call in €1 billion loans and appoint receivers over its properties here.

Treasury, the court previously noted, is insolvent with an overall debt of some €2.7 billion.

Nama acquired €1.7 billion of those loans in 2010 and the loans called in amount to over €1 billion.

Opening the challenge yesterday Michael Cush SC, for Treasury, said it only recently learned from Nama of recommendations to the agency on October 28th that it should call in the loans.

Nama failed to inform Treasury of that and instead its opening position with Treasury was one of actively engaging with it in trying to agree term sheets, he said.

The court heard a document put before the Nama credit committee on October 28th recommended enforcement of the loans. Grounds included pressure from Treasury’s creditors and serious non co-operation by Mr Barrett and Mr Ronan in unwinding the so-called Tail transaction, under which €20 million in shares was transferred by Treasury’s board, when it knew its loans were being transferred to Nama. This was done via a series of transactions to Mr Barrett and Mr Ronan in return for €100,000 and an unsecured €20 million loan note.

The October 28th recommendation was not communicated to the court when Treasury sought leave earlier this year to bring the challenge, counsel said.

Until the leave application, Treasury believed the enforcement decision was made in January but it later, from the leave hearing, learned the enforcement decision was made by the Nama board on December 8th following a Nama Credit Committee recommendation on December 6th.

Since the leave hearing, it learned, from Nama, the decision to proceed to a loan enforcement strategy was made on October 28th, “if not earlier”, Treasury said.

The process put in place by Nama, leading to its December 8th board decision recommending the loans be called, and the actual calling in of the loans on January 8th, meant it was not possible to put investor bids before Nama as an alternative to calling in the loans, Mr Cush said.

Treasury and 22 related companies secured leave last March for judicial review of the Nama decisions after Ms Justice Mary Finlay Geoghegan ruled they met the necessary threshold of raising “substantial” issues to be tried.

When the loans were enforced in December 2011 Treasury, although “balance sheet insolvent” and having defaulted on interest payments, was the “most successful” property operation in Ireland, Mr Cush said yesterday.

It had sold a building to Google for €70 million, employed 400 people and had attracted investor interest for at least some parts of its business.

The track on which Treasury was then operating with Nama was a track in which it was envisaged Nama would refinance Treasury’s loans, he said.

Treasury’s aim was to get to a position where it could exit Nama by 2017 and that was “a realistic commercial objective”.

The calling in of loans affected Treasury’s contractual rights and reputation in a situation where, in China for instance, reputation “is everything”. Mr Cush also referred to demands for repayment of loans served last Friday and Monday by KBC and Nama.

Treasury complains it was not aware at the time of a Nama Credit Committee meeting of December 6th 2011, which was advised that a creditor payment strategy submitted by Treasury was not acceptable, or of the board meeting of December 8th.

It also complains no part of the board decision was communicated to it until a partial communication of January 6th 2012 while the fact the board had decided to enforce the loan was only communicated after the legal action was taken.