We seem to have an amazing ability in this country with not being able to spot emperors without clothes – how many of us knew in 2007 and 2008 that residential property prices had inflated into a bubble, and still many didn’t act in recognition of that knowledge. And looking at Treasury Holdings’ financial position as set out in the NAMA affidavits – these two from Mary Birmingham are most significant, here and here - in the ongoing case in Dublin’s Commercial Court, you’d have to wonder what it takes to declare Treasury Holdings an utterly failed commercial entity, that this emperor has no clothes – perhaps Johnny Ronan and Richard Barrett’s genitalia swinging in your face, because it seems that NAMA’s assessment of the Treasury group as set out in its affidavits isn’t doing it.
What might be clouding our judgment is the apparent wealth of the company’s founders, in terms of perceived personal assets and also the vague talk about another entity in which the founders have an interest, Treasury China Trust (TCT) which is reportedly “worth” €1.5bn, in the sense of “having assets in mainlandChina valued at €1.5bn”. However examining the Treasury Holdings’ group position, as credibly claimed by NAMA it should be said, here’s what we know:
Cash
Cash is king for all companies, but particularly those in distress. And the cash position for Treasury as claimed in the NAMA affidavits is precarious, with the balance having dwindled – in relative terms – to €4.1m at the start of December 2011 and with an average burn rate of over €2m per month between November 2010 and December 2011 – a decline of €31.7m from €35.8m to €4.1m in 13 months – Treasury’s cash should be depleted at this point if the same burn rate continued. NAMA has conceded it has injected an additional €103m of its cash into Treasury, but presumably that cooperation is suspended with the ongoing legal proceedings.
Unsecured creditors
According to NAMA, Treasury had €13.6m unsecured creditors on 7th December 2011, and, additionally, accruals of €5.6m. Again, according to NAMA, it is Treasury’s “strategy” to pay the unsecured creditors ahead of secured creditors like NAMA and the non-NAMA banks!
Insolvency
According to NAMA, Treasury is insolvent. NAMA claims that Treasury owes NAMA €1.7bn and in addition owes non-NAMA banks €1bn. NAMA says that the majority of Treasury’s loans are in default and that Treasury “appears to be significantly insolvent”. NAMA says that at 28th February, 2010 that Treasury was insolvent to the tune of €859m. By “insolvent”, the liabilities of Treasury exceeded its assets by €859m.
Founders injecting equity
Treasury’s founders have reportedly declined to inject any further funds into the Treasury group – “Mr Barrett had said in August 2011 there was no justification to inject funds as “no equity existed””. So even if TCT is worth €1.5bn and even if the founders have significant wealth tied up in TCT, it doesn’t look as if it will be coming anywhere near the Irish Treasury group.
Despite being asked several times, including at the public accounts committee, NAMA has so far declined to provide the cost of its ultimately failed legal proceedings with Paddy McKillen, NAMA has typically said it still doesn’t have the final costs total which gets less and less credible as we are now nearly a year since the case was finally settled. The media has speculatively filled the gap and the estimate of NAMA’s and Paddy’s costs, which NAMA is to pick up, is €5-7m. When you consider that the hearings at the High Court took seven days, an additional couple of days to deal with the appeal and costs and the Supreme Court hearing took five days and then there were another couple of days on costs – a total of about 16 days – that’s a pretty tasty cost, though that will ignore preparatory work and non-court time.
The ongoing Treasury Holdings case is lower profile but is still likely to be an expensive affair. Whilst the outcome of the case remains to be decided, people are asking how Treasury Holdings which is in poor financial health, can afford to put at risk perhaps millions in legal and other fees in fighting NAMA’s attempt to appoint receivers to the group which by NAMA’s account is severely insolvent. Presumably the legal fees being incurred by Treasury are not secured or preferred creditors, so if Treasury loses the case, then those invoices from DAC Beachcroft and Michael Cush SC will stand at the back of queue, behind NAMA’s claim for €1.7bn. And if these legal fees will be added to the €14m of unsecured creditors, and if their payment is dependent on Treasury Holdings winning this case, then what does that say about a barrister’s primary duty being to the Court?
UPDATE: 24th February, 2012. As it’s Friday, you might appreciate the following which might arguably be representative of Treasury’s financial position as claimed by NAMA.
At what point do the directors of AIM listed REO have to look to their duties as directors of a listed company, especially where some of the directors are discussing “balance sheet insolvency”?
Treasury need to roll out the chewbacca defense.
http://www.southparkstudios.com/clips/103454/the-chewbacca-defense
This really says it all,which part did NAMA not understand ?
“Mr Barrett had said in August 2011 there was no justification to inject funds as “no equity existed”
On what basis or metric did NAMA conclude that in fact,contrary to the founders assessment,there was justification to inject an additional 100,000,000 of Irish Taxpayers funds?
It would appear that NAMA lent this money without enhancing its security,is NAMA a high risk taking non-recourse lender,willing to roll the dice,allow these guys another drink at the last chance saloon,it’s well past closing time.
It would appear to be so, JG.
Of course all of this is contingent upon when €100,000,000 was given by NAMA to TH.
NAMA’s daddy is NTMA,with Corrigan entitled to stuff his trousers with 500,000 a year why did NAMA,have to outsource the decision making to PWC?
Supposedly,NTMA and NAMA are “commercial” enterprises packed with leading experts in finance,drawing exorbitant salaries and doing bugger all.
Yeah,yeah I read that Corrigan and Brendan “waived” some salaries and bonus,but did they waive goodbye to them or defer them.It has not been suggested that they actually restrurctrued their humongous compensation packages,what does “waive” actually mean ?
Why are NTMA and NAMA sucking millions from the Irish Taxpayer and can’t make commercial decisions,without having their hands held.
In fairness,Corrigan was most likely away in the far east or somewhere,visiting “investors” in bonds that he does not have to sell,pounding the pavement,yeah right,more likely swanning around staying in four star hotels,living the life off Reilly and delegating,outsourcing vital decisions to cover his ass.
Perhaps the trifling matter of an additional 100,000,000 is simply beneath Corriginan and he can’t be bothered,does no one at NTMA or NAMA have the skill set or confidence to actually make a decision ?
Perhaps you should find out if Mr Corrigan was part of the decision process before you go off on a day-dream/rant about him.
@FOR you can be sure like Pontias Pilot he was not,after all he is only on charge !
@Fergus more than delighted to give you background for my rant/dream on the head of NTMA but just got off redeye,on a phone will with pleasure expand on Corrigan,bit later though,apologies.
More when you’re fitter, but Corrigan is NOT “in charge” at NAMA in any relevant sense.
@Fergus fit as the proverbial fiddle,just mobile at present.The ‘tail’ transaction while midly amusing,pales in comparison to the losses facing the Irish Taxpayers total exposure,this is not worthy of Corrigans time ?
Does Brendan McDonagh report to John Corrigan ?
“Presumably the legal fees being incurred by Treasury are not secured or preferred creditors, so if Treasury loses the case, then those invoices from DAC Beachcroft and Michael Cush SC will stand at the back of queue…”
To the extent that some of them have not already been paid, presumably
” … behind NAMA’s claim for €1.7bn. And if these legal fees will be added to the €14m of unsecured creditors, and if their payment is dependent on Treasury Holdings winning this case…”
The second “if” is a big one, no ?
“…. then what does that say about a barrister’s primary duty being to the Court ?”
I have no idea. What *does* it say about that duty ?
If (that word yet again) you mean that the barristers involved are in breach of that duty by accepting a brief from an insolvent company to make the case that despite “balance-sheet insolvency” a creditor may be wrong to appoint a Receiver, then you must know something about the law and barristers’ duties that I don’t.
Please enlighten me.
@Fergus, it’s a simpler point being made. If any company which is insolvent and has secured creditors which would be expected to take possession of 100% of the assets of that company if said company was was wound up. If such a company engaged third parties – any third parties – to prevent the lawful proceedings of creditors to enforce their rights and security, then are those third parties not operating on a no-win, no-fee basis? Because should the company lose, then you would expect those third parties to take their place in the creditors queue behind the secured creditors, would you not?
@NWL good luck tomorrow,the nation awaits…all best.
@John, thanks, I really did put my heart and soul into “The Artist” script. Fingers crossed! Sorry, what are you talking about “tomorrow”?
The “simpler point” is not the only one you made.
The issue *to be decided* is whether NAMA’s action is or is not “the lawful proceedings of creditors to enforce their rights and security”.
Are you going to clarify your comment about the barristers’ duties ?
@Fergus, well we’re just going to have to disagree on the point I made, it’s in the blogpost.
With respect to barristers, their primary or overriding duty is to the Court. And if their reward or fees aree based solely on their success in arguing their clients’ case, then that primary duty can clearly be exposed to being compromised.
Or are you saying it is now practice in Irish legal sector for fees to be paid in full upfront, before work is undertaken?
1. I am not disagreeing with the main point that you made; I haven’t addressed it properly yet.
2. If the logic of your point on barristers’ fees is accepted, then no barrister in any case should be paid, or even promised payment, because it would inevitably taint their work. The courts themselves would then have to find funds to pay them, assuming that their input is valued. This is an interesting idea (seriously, and it’s not a not new one) but its nothing but a “red herring” here. From the way it’s shoe-horned in, I suspect ulterior motivation.
3. I haven’t been around for ever, but I suspect that the practice of lawyers requiring to be paid “up-front” if there are concerns about being paid later, *has* been around for ever, or at least for as long as there have been lawyers. I myself have more than once required such payment, and much more than once regretted not having done so. The payment is rarely “in full” and even more rarely entirely in advance of work being done. And remember that, though it varies hugely between cases, the court hearings are normally not “the work” in its entirety i.e. the time spent on the case *before* hearing commonly dwarves the time spent *at* hearing.
@NWL impossible to top The Parrot,yes The Artist is sublime,I’m sweating and sure not to appear in Part 2,echos of The Godfather,the sequel surpassing.Thank you for excellent posts,all best.
@Fergus lets start with a simple link,NWL if its ok with you can i expand on Corrigan,so Fergus,Corrigan is on the NAMA board and is an old mucker of Bruders from AIB.
“Mr. John C. Corrigan
Board member (ex-officio)
Member of the Risk Management Committee
John Corrigan was appointed Chief Executive of the National Treasury Management Agency (NTMA) in December 2009. He joined the NTMA in 1991 shortly after its establishment and was initially responsible for managing the domestic component of Ireland’s National Debt. In 2001, Mr. Corrigan was involved in the establishment of the National Pensions Reserve Fund (NPRF) and was the Fund’s Investment Director until his appointment as NTMA Chief Executive. Before joining the NTMA, Mr. Corrigan was Chief Investment Officer of AIB Investment Managers, having previously worked in the Department of Finance.”
http://www.nama.ie/about-us/board-and-committees/board-members/
FYI-all Treasury websites DOWN !!!!
“John Bruder serves as Managing Director of Treasury Holdings Ireland at Treasury Holdings Group. Mr. Bruder has over 25 years experience in property and investment management and served as Head of Property with AIB Investment Managers Ltd. In 2001 he served as President of the Society of Chartered Surveyors in Ireland. He is responsible for controlling Treasury Holdings’ property portfolio, securing tenants and pursuing opportunities to grow existing property portfolios in Ireland and abroad. Mr. Bruder serves as a Director of Castle Market Holdings Ltd. and Treasury Holdings Group. He holds an MBA from University College Dublin. .”
@John, yes Treasury Holdings website down with a message suggesting you contact jonathan@huguenot.ie for information.
http://www.treasuryholdings.com/
http://www.downforeveryoneorjustme.com/treasuryholdings.com
Huguenot.ie is a branding and design company and presumably are hosting the TH website.
http://www.huguenot.ie/
Are they unsecured creditors?
All of that suggests to me that, whatever good reason there may be – I am still sceptical that there is such – for Corrigan to be involved in the Treasury case is overcome by the inappropriateness of his being involved in a decision which impacts on someone to whom he has close ties of friendship.
@Fergus have a quick read of the IT piece,explains somewhat my ehm rant/dream !
“In response to the Minister’s request, Mr Corrigan and Nama chief executive Brendan McDonagh took a 15 per cent pay cut. This reduced Mr Corrigan’s annual salary to €416,500 and Mr McDonagh’s salary to €365,500.”
http://www.irishtimes.com/newspaper/frontpage/2012/0211/1224311625229.html
@Fergus,Corrigan was scheduled with a few pals to get back on the road,for the love of god has he no shame wasting the Irish Taxpayers money.
“John Corrigan, with his director of funding and debt management Oliver Whelan, and economist Rossa White, are to visit Kuala Lumpur, Singapore and Seoul, where they will meet ……………..”
Exactly who are you meeting Corrigan,no one knows is it a dirty little SECRET.
http://www.irishtimes.com/newspaper/finance/2012/0213/1224311683207.html
NWL-indeed,Fergus enjoy rest of weekend i will leave it at that.
@JG, As I said previously…. any organisation is simply the people that are in it. And when Johnny looks at his opponents, these are the people he sees.. his ex employees, paid advisors and consultants – the “soupers”….the fast-footed poachers turned gamekeepers. The problem for him is that it brings out the arrogance in him, because he is disdainful of them. And as I oft repeat – arrogance comes before a fall.
@WSTT are you taking a U turn on your road to Damascus !
Whatever,his emotions towards the “opposition” there is that rather troubling aspect of the BILLION,shortfall!
The issue I have with Corrigan,is he’s on NAMA’s credit committe but appears coated in Teflon.Who,approved the extra 100,000,000 and why,the credit committe I assume,signed off.
Attempting,to get Tresuary to sign away it’s legal rights smacks of desperation and reeks of trying to cover up,the funding here.
@jg, It was just a temporary aberration – I’m taking the stronger tablets! :-)
@WSTT good to hear,was concerned about you!
@Fergus “All of that suggests to me that, whatever good reason there may be – I am still sceptical that there is such – for Corrigan to be involved in the Treasury case….”
There are at least a BILLION reasons,why Corrigan should be actively involved.He’s CEO of NTMA,sits on NAMA’s board and on the Risk Management Committee.At this point,are you still suggesting he was not involved in the decision making process regarding Treasury.If not then what exactly is he doing?
“Governance and accountability
NAMA was established as a separate statutory body with its own Board and CEO appointed by the Minister for Finance. It operates under the aegis of the National Treasury Management Agency (NTMA) which provides it with staff and business support services.”
http://www.nama.ie/about-us/
Even Barrett blames the NAMA Board,Sindo today ran something on it.
“Referring to the email in his affidavit, he said: “By this time, unknown to me or anyone else in Treasury, the board had already decided on Treasury’s fate. In hindsight, I can only conclude that Mr McDonagh and others within Nama had decided to lull Treasury into a false sense of security concerning its willingness to proceed to final agreement on term sheets.”
The only people lulled into a false security here was NAMA,who ‘gifted’ Treasury over 100,000,000,without securing PG’s from the founders for additional funding.
All the Irish developers ran on fumes. Their profits were an illusion. They were based on inflated bubble values that were used to “gear up” and borrow more money from “cheerleading” and gullible banks to buy more property at equally inflated prices. It was an expanding bubble based on credit.
As John Corcoran might say – All the profits were fiction. Not just Treasury’s.
Just to be clear. Are you saying that no Irish property developer made profits, ever ?
@WSTT doing my ‘homework’ was on hols,so re-reading the ‘pleadings’ have to say depressing stuff.
NAMA ‘purchased’ 1.7BILLION in basically non-performing Treasury loans,difficult to understand why they would advance additional capital and funding.They,should only be concerned with the performance of the loans purchased.Have to say,NAMA’s negotiating style leaves a lot to be desired,they had Treasury where they wanted/needed them,basically broke,but failed to achieve any enhancement in security or PG’s from founders or senior executives.This Bruder,chap keeps appearing,is he allergic to signing guarantees,so why even bother talking/meeting with him?
Also,constant reference in Mary’s affidavit’s to Ronan’s personal borrowings,they appear to be in NAMA,too.
Profit’s were made just very few cashed in the winnings,most doubled down,basic lack of personal or professional discipline.
@jg, Bruder ran the place. I agree that very few cashed in. It’s an “Irish” thing….. You never sell the farm. It goes back to the agrarian culture. We are not the most sophisticated of people. Priest ridden, political gombeenism, tugging the forelock at our betters, begrudgery – we’re good at that. Financially astute – Naw, with few exceptions, we never learnt that. Just not our scene.
@WSTT,assume he is an ‘owner’ then, heavily involved.
REO-issued this statement,could lead one to believe they received say just under 100million in CASH,and everything was tickety-boo.
“REO completes sale of Montevetro building to Google for €99.9m
Further to its announcement on 17 February 2011, Real Estate Opportunities plc, the real estate investment and development group active in Ireland and the UK, is pleased to announce that it has completed the sale of Montevetro, Dublin’s tallest commercial office building, to Google for €99.9million, to be satisfied in cash”
http://www.realestateopportunities.co.uk/News.htm
@jg. Hired gun, John. He used to be in charge of the property funds in AIB Investment Managers.
Quote from the SUnday Independent article:
“Intriguingly, in referring to his own dealings with Macquarie and Hines, Mr Barrett raised the matter of a meeting he had with Nama’s chairman Frank Daly and its chief executive Brendan McDonagh on November 8 last, during the course of which he insisted he was “actively dissuaded” from attempting to bring potential bids from either investor before Nama’s credit committee on December 6 or its board on December 8.
In the event, Treasury’s submission of its final creditor strategy came on December 7, a day after Nama’s credit committee had made its decision to recommend the appointment of receivers to the agency’s board.
Coupled with his recollection of the November 8 meeting with Messrs Daly and McDonagh, this sequence of events led Mr Barrett to suspect that Nama had already made its mind up to appoint receivers long before its credit committee and board had met to consider the matter last December.”
Question: Why would the Chairman and Chief Executive “dissuade” the company from attempting to bring potential bids in for the Treasury portfolio. The allegation if proven confirms everything that the funds that have visited NAMA for the purpose of buying assets claim about trying to deal with NAMA, that the agency doesn’t want to sell. It wants to hold most of its current assets.
P.S. As one wise oldtimer, once said to me “Ignore what they say, just watch what they do.” And NAMA has sold little or nothing in Ireland in the two years of its existence.