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, an “insolvent debtor” unable to continue trading without money from Nama, before calling in loans and appointing receivers to its properties here.

At the time that 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 €100 million working capital after acquiring some €1.7 billion of the overall €2.7 billion debt in 2010, called in the loans after a process of engagement 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 trade, had failed to provide a satisfactory strategy to deal with creditors and where Nama considered and rejected “investment” proposals, he outlined to Ms Justice Mary Finlay Geoghegan.

Treasury, counsel added, had also made attempts to go back on an agreement to unwind the controversial “Tail” transaction under which €20 million 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 Johnny Ronan for €100,000 and an unsecured €20 million loan note.

Additional information from 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 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 basically arguing the law required Nama to tell Treasury that Nama was thinking of writing a letter to it demanding money that it admitted owing to Nama, 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 Nama had given Treasury an opportunity to be heard and Treasury was an experienced developer.

Treasury was not entitled to take legal action in circumstances where it had a standstill agreement with Nama last January during which Nama engaged with the proposed investors, he added.

Mr Sreenan was making arguments opposing the action by Treasury Holdings and 22 related firms to a December 2011 decision calling in loans and a January 2011 decision appointing receivers.

Earlier yesterday, in further submissions, counsel for Treasury 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.

Treasury also disputed arguments by KBC Bank, owed €75 million by it, that the action is pointless as KBC had said it would not agree to restructuring the loans. If Nama had not decided to enforce the loans, KBC could not have moved to enforce, it was argued.