Bankrupt Irish property developer Ray Grehan has agreed to reverse the sale of an apartment in Knightsbridge, London in favour of the National Asset Management Agency, The Irish Times has learned.
Under the terms of the settlement, Nama will receive 85 per cent of the net proceeds of the sale of an apartment in the prestigious One Hyde Park development in Knightsbridge with Mr Grehan's wife Geraldine Grehan receiving 15 per cent.
In effect, Nama and Ms Grehan will share the balance of the sale price after the mortgage on the property has been paid off to Barclays bank, which holds a charge over the apartment.
The Knightsbridge apartment was originally bought by Mr Grehan for £3.7 million in 2007. The apartment was sold on by Mr Grehan to a company called Postlake Ltd in August 2010.
Postlake was controlled by SMP Trustees, which in turn was linked to Montan Trust. Montan was set up on April 1st 2010, with the beneficiaries listed as Mr Grehan, his wife and their three children.
Act of fraud
Nama alleged that the change of ownership had undervalued the apartment and that this constituted an act of fraud against creditors within the meaning of Section 423 of the UK's Insolvency Act 1986.
Nama and Mr Grehan’s bankruptcy trustees took a legal action against the Irish developer seeking to have the change of ownership reversed.
The bankruptcy trustees brought a claim to set aside the sale on the basis that it constituted a “transaction at an undervalue defrauding creditors”.
Court hearings relating to the dispute were held in London last year but both sides have now reached an agreement.
Details of the settlement were lodged with the queen’s bench division of the High Court in London earlier this week.
Estimated valuation
It is estimated that the apartment could fetch about £5 million on the open market, based on current property prices in the area.
It is not clear what size of mortgage is owed on the property to Barclays but the settlement indicates that Nama will receive a seven-figure sum from the sale.
Ms Grehan had resisted the proceedings on behalf of herself and her children. She contended that part of the funds used to pay the deposits relating to the London property belonged to her.
It appears that Barclays will appoint receivers to handle the sale of the Knightsbridge apartment.
Each party has agreed to bear their own costs relating to the settlement.
