There might be some raised eyebrows at the speed with which Paddy McKillen’s case against NAMA has been dealt with. To remind ourselves, here are the key milestones
1st July, 2010 – Paddy McKillen submits application to Ireland’s High Court for a judicial review of NAMA’s dealings with his loans
14th July, 2010 – Application made by the State (unopposed by the applicant) to have the matter transferred from the High Court to the Commercial Court
19th July 2010 – approval to transfer case from the High Court to the Commercial Court, case set down for 4 days in October, 2010
5th October, 2010 – the case opens at a special three-judge division of the High Court
14th October, 2010 – the hearing at the High Court concludes
1st November, 2010 – the judgment at the High Court is handed down – Paddy loses on all counts.
18th November, 2010 – terms of appeal to the Supreme Court decided by the High Court
15th December, 2010 – opening of appeal hearing at the Supreme Court
23rd December, 2010 – hearing of appeal at the Supreme Court concludes
3rd February, 2011 – judgment from the Supreme Court
But this was an important case to the financial well-being of the country as it threatened one of the government’s key planks in sorting out the financial crisis (and to remind ourselves they were the guarantee, NAMA, recapitalization and restructuring). If NAMA’s acquisition of loans (€71bn+ so far) is undermined then NAMA might face all sorts of challenges by developers unhappy with their treatment at the hands of the agency.
The Supreme Court has ruled on two of the five strands to the appeal and have determined that NAMA’s decision in December 2009 to absorb Paddy’s loans was not validly taken as it pre-dated NAMA’s coming into being on 21st December 2009. However it would appear that all NAMA need do is formally decide to absorb his loans. So not much of a victory for Paddy.
The other strand ruled on – whether the EU intended that NAMA only take non-performing loans – NAMA’s position was upheld, that is, that the agency is entitled to absorb both performing and non-performing loans.
The other three strands, consultation, fairness and constitutionality of absorbing Paddy’s loans have not been ruled on since the Supreme Court decided NAMA’s decision to absorb the loans was invalid. It is expected that NAMA will formalize now its decision to absorb Paddy’s loans in which case, the Supreme Court will then rule on the other three strands. Yes, it’s a little bizarre.
What next? A formal decision by NAMA to absorb Paddy’s loans. Then a judgment from the Supreme Court on the other three strands to the appeal. I would expect Paddy to lose but not as comprehensively as at the High Court. What then? An appeal by Paddy beyond these shores to the European Court of Justice? Maybe, but more practically important is how NAMA will now act. Bizarrely the agency decided to refrain from absorbing Paddy’s loans pending the outcome of the Supreme Court appeal. Meanwhile there has been a flurry of activity with one of Paddy’s key assets on which there is substantial NAMA-eligible lending, the three luxury Maybourne hotels in London, Claridge’s, the Connaught and the Berkeley. The owners of Britain’s Telegraph newspaper have recently acquired 25% of the Maybourne group and are said to be about to acquire Derek Quinlan’s 35% interest in the group which would then give them a controlling interest. Paddy McKillen is reported to own 37% of the group and Kyran McLoughlin and others 3%. There are conflicting reports about the group’s €784m of debt with some suggestion that NAMA has extended the loans (through its control of NAMA banks pre-acquisition, one would guess) and other reports suggested the loans needed to be redeemed at the end of January 2011 (three days ago!).
Remember you will find extensive background (including dates, participants including representatives, witness statements etc) and detailed updates on this case under the dedicated tab, Paddy McKillen v NAMA.
Money and Banking Statistics: December 2010
UPDATE: Whilst this judgment today might have limited effect on NAMA’s dealings with Paddy McKillen (the agency has refrained from absorbing Paddy’s loans pending the outcome of the appeal and it seems a relatively simple matter to ratify the decision today to absorb Paddy’s loans which places Paddy back at step one), there may be serious consequences on NAMA’s dealings with other developers’ loans where the decision to acquire was made before 21st December, 2009. Before examining potential consequences, it might be worth remembering that NAMA paid Arthur Cox the sum of €911,250 including VAT in respect of that firm’s work for the agency in 2009 and €247,667 to Allen and Overy in the UK. It’s not entirely clear from the Comptroller and Auditor General’s report from which these sums are extracted, what the remit for these two giant legal firms was but there may be questions to ask about any advice given in respect of pre-formation actions.
Remember that NAMA required the banks to provide the first valuations before Christmas 2009 and NAMA’s valuation date is 30th November, 2009. This implies to me that the decisions made in early December 2009 to acquire loans affects more than just Paddy McKillen. Of course NAMA famously decided not to absorb Paddy’s loans pending the outcome of the present legal proceedings. But NAMA has absorbed some €71bn of loans. In some cases such as those listed below, NAMA has been associated with quite serious actions in respect of these companies and individuals. Is the legal status of these actions now in question? No doubt we will see in coming days.
| Company | Status |
| McENANEY CONSTRUCTION LIMITED | Receivership |
| PADDY BURKE (BUILDERS) LIMITED | Receivership |
| MELLVIEW CONTRACTORS LIMITED | Receivership |
| ARCADIA DEVELOPMENTS LIMITED | Receivership |
| LYNDONBARRY ESTATES LIMITED | Receivership |
| MELLVIEW PROPERTIES LIMITED | Receivership |
| Michael McNamara and Company | Receivership |
| Radora Developments Limited | Receivership |
| John J Fleming Construction | Receivership |
| Pierse Building Services | Liquidation |
| Pierse Construction | Liquidation |
| Whelan Group (Ennis) Limited | Liquidation |
| Whelans Limestone Quarries (Contracts) Limited | Liquidation |
| Whelans Limestone Quarries Limited | Liquidation |
| Whelans Quarries (Carraigtwohill) Limited | Liquidation |
| Shannon Explosives Limited | Liquidation |
| Paddy Shovlin/Anthony Fitzpatrick/Patrick Fitzpatrick | Judgment |
| Cicol Limited | Liquidation |
And NAMA has apparently overseen other actions by the bigger developers – disposing of yachts and Bentleys not to mention €2bn of property assets in 2010 for example. If a developer feels he suffered a loss as a result of NAMA’s actions, does he have any redress?
UPDATE: The NAMA Chairman, Frank Daly has issued a press statement which expresses disappointment at the judgment, thanks the legal team, claims the ruling affects Paddy McKillen’s loans only and states that NAMA will study the decision and reflect on options. So no immediate move to confirm or ratify the decision, which is interesting. Also not sure if the claim that this judgment just affects NAMA’s actions with Paddy’s loans is correct.
UPDATE: Decision now published by the Supreme Court in two parts (here and here)
NAMA Wine Lake 
KAtie,I readthe wrong judgment I read the High Court one!!! Seems you are right!!!! I’ll send you on the High court statement anyway!!
I can’t understand how anyone can consider NAMA a solution to the Irish mess.
It is so obvious to me that what they are doing is murdering the Irish economy even further.
I personally feel that NAMA is totally unconstitutional it violates basic fundamental rights, to overcome politicians’ errors and lack of regulation.
Good, sound businesses and business people, entrepreneurs that have the ability to take Ireland out of this economic disaster are being hammered by an organism ran by public workers that are costing the country a fortune.
Can’t people see it?
I wonder whether the “good, sound businesses and business people, entrepreneurs that have the ability to take Ireland out of this economic disaster” to whom you refer are the very people who, with their banking pals and political cronies, created the disaster and are now walking away from their obligations, leaving taxpayers to pick up the pieces and, in your terms, murdering the Irish economy even further?
I have no strong liking for Nama. It would have been nice if the banks, having been taken over by their angry and ruthless bondholders, could have been left to sort out their bad loans without support from the taxpayer.
I agree with you completely AC. Nama will destroy wealth. It serves no function now that the Irish banks are almost completely state owned. I am surprised at namawinelake’s biased view of Paddy McKillen’s case – it looks like namawinelake certainly did not want him to succeed – it makes me wonder why and who namawinelake really is?
It just kicks the can down the road. No real winners or losers. More mess.
What is becoming apparent within NAMA is that the use of receivers and liquidators has been a complete disaster. At recent meetings there have been cries from the inmates in this crazy institution of “For God’s sake, don’t appoint another receiver!”
There is also considerable disquiet about the leakage of information to UK agents, developers and funds regarding the affairs and assets of the NAMA developers in London.
The other issue that has caused one discomfort to some of the Portfolio Managers is the NAMA policy in relation to the borrowers. One PM took it upon himself to complain to the incoming politicians about a “personal vendetta” culture towards the debtors that was inhibiting NAMA’s ability to perform in a commercial manner.
I think he meant that they were more interested in getting the wife’s jewelry rather than disposing of some of the €70 billion of property assets, getting in some cash and cranking up the economy.
Oh…. and still no business plans signed by both parties.
But hey, open the champagne, NAMA’s first Irish property sale, a be-hatted scarecrow on a piece of farmland opposite the K Club closes this month. Its marketing by HT Meagher O’Reilly was mentioned here last year.
I think it is unfair to question what in my opinion is the most open, well researched and balanced source of information on what is a highly secretive, sensitive political organisation. NWL has only ever reported the facts as available and has given all stakeholders an opportunity to comment including yourself. Having said that there is no doubt that NAMA is a failure before it has even begun in the fact that it has failed to prevent the nationalisation of the domestic banking system. As Frank Daly pointed out in his statement NAMA was part of emergency legislation. In my opinion the emergency has ended in death for the banks and there is no longer any need for this particular remedy. It is headed by a vindictive Chairman whose pursuit of the individuals, whilst justified from a legal and moral standpoint, fails to deliver any real value in terms of return on the taxpayers investment. Whether the proletariat like it or not we will need the skills of the people who ‘brought about this crisis’ to bring us out of it. I am talking exclusively about the property professionals who are needed to monetise the half-finished developments, suffering regional shopping centres and vacant office buildings. Until we can collectively accept this fact we are doomed to drift in an economic doldrum
it’s getting so you can cut and paste old comments…..
-property boom, collapse, litigation boom:
like a transfusion, money flowing into one vessel, emptying from another, taxpayers diligently filling the resevoir with their sweat.
oh to be an Irish attorney right now, the boom is just starting.
I would concur with Banama Republic’s comments. This website is an invaluable asset and at the present time unique in its truths. When this is all over, it will have documented Ireland’s worst nightmare for posterity. Well done, NWL!
BTW, one of the reasons for the stagnation (obviously not the only reason) is purchaser fear. With NAMA’s motherload of property assets overhanging the market like a Damocles sword, nobody wants to buy until the market has seen NAMA’s pricing.
But, of course, NAMA aren’t selling. They are still taking notes and collecting information. So we just wait…. and wait… and wait…..
A friend described how he met with three (very) top NAMA personnel recently. All three of them took separate notes at a meeting that he hoped would result in decisions. It didn’t. They told him that they were actually unable to make any decisions. They could only take notes. All decisions were being made by the Minister and the Department of Finance.
Like I said earlier, the lunatics are now fully in control. Because truth to tell, these are the real people who got the citizens into this mess. The developers and their friendly bankers got each other into a mess. But it was the government and the DoF (primarily Brian Lenihan as MoF) that shafted the citizens of this country on that fateful September night in 2008 and through all the appalling decisions relative to the bondholders thereafter.
I would argue that Kevin Cardiff and David Doyle are equally if not more responsible than Minister Lenihan and certainly less admonished publicly. It may just be that I have been watching too much of my Yes Minister box-set of late! The politician signs onto what his advisors recommend by and large.
Two very trustworthy friends work for two separate international finance houses in London. They had a briefing with Fine Gael TDs last week and were shocked to hear that Deputy Noonan (possibly Minister for Finance after February 25th) nor anyone else in FG had met with any of the members of the Board of NAMA.
However one commented that post election he expects that the Chairman and the Chief Portfolio Manager will be joining the 400,000 poor souls on the scrap-heap. Interesting if it happens to actually materialise.
Hi Banama Republic, I suppose it would be section 22 of the NAMA Act that the incoming administration would look to if it wanted a change to the board and specifically subsection 4:
(4) The Minister may remove an appointed member on reasonable notice in writing at any time from membership of the Board (or, if the appointed member concerned is the Chairperson, either from the Board or only from being Chairperson) if—
(a) in the Minister’s opinion, the member—
(i) is not adequately performing his or her functions, whether because of incapacity through illness or injury or otherwise,
(ii) has contravened section 30 or 31 [basically exposed themselves to a conflict of interest], or
(iii) has committed misconduct specified in the written notice,
(b) in the Minister’s opinion, a material conflict of interest has arisen in relation to the member, or
(c) his or her removal appears to the Minister to be necessary or expedient for the effective performance by NAMA of its functions.
There doesn’t seem to be any entitlement for the government of the day to remove employees below board level, though plainly the government can impress its wishes on the board which it can appoint.
You can see the NAMA Act here – http://www.attorneygeneral.ie/eAct/2009/a3409.pdf
I understand that under the letter of the law that the Minister would have no direct power to remove officers below board level, but as you point out any new administration could bring pressure to bare on the organisation to act.
Certainly there is a lot of opinion and assertation on this forum and in other media outlets that both the Chairman and the Head of Portfolio Management have either potential conflicts of interest (e.g. in the Paul Coulson Yacht episode) and are impeding the effective preformance of NAMA (e.g. various anecdotal reports of personal vendettas rather than commercial approach to the real issues). If the new Minister were to interperet the above subsection of the Act in the same way then I believe that they could (not by legal means alone) pressure resignations/terminations of contracts from Senior officers below board level.
p.s. just put few quid on Ho Chi Quinn for MoF @8/1. WSTT I owe you a pint if it comes in. NWL I’ll extend that (generous) offer to yourself as well.
I heard those exact comments regarding the self same personalities and the scrapheap from the same source but at Shadow Minister level. It might be the reason why there has been no contact or pleasantries to date.
Also heard that Ho Chi Quinn would be the new Minister for Finance. Same source.
Down the Rabbit hole we go…. Feel free to PM me but is it sources in the blue or red corner that are tipping Ruari?
Other than those titbits all else my developer contacts tell me is frustration at inaction and delays which continue unabated.
Finally watch out for a big refinancing/debt forgiveness (€500m+) happening before end March in the UK.
From the blue corner – the horses mouth, you might say. He called in the “anointed one” from the red corner to meet and greet.
It sure looks that way given the fact that he launched the economic manifesto for Labour. Delighted, if only from an aural bias, that Joan Burton won’t be in this high profile position.
And if you’re just spreading this to lay it off on Betfair you’re a durty so and so!
Would I do such a thing? ;-)
He is still available at 8/1 with Paddy Power. Good odds, I would have thought.
BTW, I had a chat with an executive in NAMA today. They are very frustrated and totally behind in dealing with any of the loans or underlying assets. He says they are still consumed with setting up and co-ordinating the IT section and inputing data. Not ready at all.
He does say that all they want to do is sell. They have no interest in supporting developers’ projects, providing loans or holding assets. They have been told to get in the money.
But like St. Augustine…… not just yet
I see this morning that Mr Quinn’s odds have been cut in half to 4/1 on Paddy Power. He is now 2nd favourite behind Michael Noonan for the position.
Ah, the power of the NAMAwinelake website! (No pun intended)
Interesting though.
McKillen wants to open an nightclub on Harcourt St
http://www.dublincity.ie/swiftlg/apas/run/WPHAPPDETAIL.DisplayUrl?theApnID=2120/11&backURL=Search Criteria > <a href='wphappsearchres.displayResultsURL?ResultID=1789202%26StartIndex=21%26SortOrder=APNID:asc%26DispResultsAs=wphappsresweek1%26BackURL=Search Criteria‘>Search Results
Thanks Neil – interesting news. I see that May Property Holdings is one of the 15 joined with Paddy in the recent High/Supreme Court case. The full text of the application at Dublin City Council is
“For the following : a) Change of use of the basement from office to night club and part of the car park (part-covered, part open air) from parking to night club; b) Construction of external screen walls and suspended floors at basement level; c) A wheelchair lift from street to basement level, with gate in railings and b) a 60cm x 60cm wall-mounted sign.”
I see that you have gone on twitter to bring us news that we might have expected to see in tomorrow’s Sunday Tribune. I hope the receivership concludes with a future for the paper and staff. Good luck to you all there.
You can follow Neil on Twitter at http://twitter.com/ncallanan
News today that Dublin City Council rejected the application for the nightclub on Harcourt Street, apparently citing ““over-concentration of this use in this location”
http://www.irishtimes.com/newspaper/property/2011/0519/1224297279286.html
Yep, this one
http://www.tribune.ie/business/news/article/2010/dec/19/mckillen-accounts-do-not-give-fair-view-of-company/
@sf ca writer.
The litigation boom is just beginning.
Can you imagine what will happen when the borrowers begin to sue the Receivers and Liquidators for negligence in the marketing of assets in a business where they have limited knowledge and where there is so much corruption?
They had better dust off their PI insurance policies!