News broke yesterday evening of imminent moves by NAMA to appoint receivers, Ernst and Young and, in addition, PwC to assets formerly controlled by Treasury Holdings, the Dublin property development company controlled by the colourful Johnny Ronan and the understated Richard Barrett. Treasury reacted to NAMA’s imminent move by going to Dublin’s High Court to seek an injunction preventing the appointment by NAMA of receivers. In addition, Treasury is reported to be seeking a judicial review of the way in which NAMA is engaging with Treasury’s loans. Both matters are scheduled to come before the courts at 11am this morning, though there is no mention of the applications in the Legal Diary, presumably because the applications were reportedly made minutes before 5pm yesterday.
So what’s at issue? Reporting suggests that Treasury believe that because two third part investment companies – identified as MacQuarie and Hines – are offering NAMA more for the Treasury loans than NAMA paid the banks. The figures being bandied about are that the Treasury loans have a par value of €2bn, were acquired by NAMA paying just 45c in the euro or €900m in total, and the two third party investors are said to be offering more – just “more”, no numbers yet on the value of these offers – than €900m for the loans. Treasury seem to be suggesting that NAMA should be accepting these offers because they are in excess of what NAMA paid. It’s hard to see how that would succeed in court, if that is indeed the Treasury argument. NAMA is set up to maximise income from its assets and although the Agency has said in the past that its main priority is to recoup what it paid for the assets – plus any additional advances to the developer in question – it is hard to see NAMA being bound by this. For its part, a NAMA spokesman is quoted in the Irish Times as claiming the Agency had “engaged rigorously with Treasury Holdings since 2010. Unfortunately, it has not been possible to achieve a mutually acceptable agreement on the way forward with respect to the group’s NAMA loans . . . NAMA analysed the two proposals made and they were not commercially acceptable. The NAMA board decided to proceed with the appointment of Receivers at the end of today’s standstill period.” It is also noteworthy that Treasury is criticising NAMA’s commercial engagement in this matter, and it is claimed that NAMA has not engaged in negotiation with the two third party investors, but has merely sought clarification of offers.
So the prospects for the injunction don’t look too bright from Treasury’s point of view. But with respect to the second matter, the application for a judicial review, that becomes less clear. We saw in the David Daly case last year that the courts weren’t very welcoming of objections from developers to NAMA’s treatment of its loans, when those objections were made late in the day. Remember Paddy McKillen objected to NAMA’s acquisition of his loans right from the start, and I think that was a critical factor in Paddy being eventually successful. The courts seemed to view developers objecting after NAMA had acquired loans, and after initial consensual engagement with NAMA, as rendering weak any claim by developers to entitlements not previously sought. NAMA acquired Treasury’s loans in the first half of 2010, and until the middle of last year, Treasury was regarded as a NAMA favoured developer, indeed the word on the street was that it might be the first developer to sign an agreement with NAMA – not just a memorandum of understanding and heads of terms. But things seemed to go downhill for the NAMA/Treasury relationship in the second half of the year and in December 2011, NAMA and other lenders had administrators appointed to NAMA’s most valuable asset, the Battersea Power Station which was controlled by a company, which was in turn controlled by Treasury. Since then the writing has been on the wall for Treasury.
So the betting on here is that NAMA succeeds in having receivers appointed. It is not clear what properties NAMA is targeting but reporting today has mentioned the PwC building in north Dublin Docklands (pictured below). Notably there is no mention of the National Convention Centre which was developed by Treasury. Other assets reported to be in NAMA’s cross-hairs include Central Park in Leopardstown and the Ballymun Shopping Centre. There is a related post on here which describes the ultimatum that NAMA had apparently given Treasury in the run-up to yesterday’s decision to appoint receivers. There will be updates here from 11am.
UPDATE (1): 26th January, 2012. Orla O’Donnell, legal correspondent from RTE tweets that there will be a hearing on 21st February 2012 where Treasury’s challenge to NAMA’s appointment of receivers will be dealt with. Orla also tweets that Treasury gave NAMA a commitment on 10th of January 2012 when the so-called standstill agreement was given that Treasury would not seek to challenge the appointment of receivers (“ah now, that’s not fair!” comes to mind). Orla tweets “NAMA says Treasury gave undertaking on Jan 10th that it wouldn’t challenge receivers if NAMA gave 14 day standstill period” and “Treasury Holdings’ challenge to appointment of receivers to some assets by NAMA to be heard Feb 21st”
UPDATE (2): 26th January, 2012. RTE is now providing a report on this morning’s scheduled proceedings. Receivers have now been appointed, apparently, and presumably PwC and Ernst and Young. But undertakings have been given between the parties as to the conduct of the receivers until the court has dealt with Treasury’s applications. It seems that Treasury secured the services of Michael Cush SC to act as barrister on its behalf today – he was Paddy McKillen’s saviour but wasn’t all that effective in the David Daly case – and the respondents are to be expanded so that they now comprise NAMA, KBC, the Attorney General and Ireland – the last two indicating that constitutional matters will be raised in the course of the proceedings, and specifically the constitutionality of elements of the NAMA Act. It is reported that (unnamed) lawyers acting for NAMA wanted to put on the record “that NAMA received an unequivocal undertaking from Treasury Holdings that Treasury would not challenge the appointment of receivers if NAMA agreed to a two-week standstill period” but it is further reported that “lawyers for Treasury said they did not agree with that statement” We still don’t have a comprehensive list of assets subject to foreclosure but presumably the January 2012 NAMA foreclosure list (due at the end of February 2012) will give the details.
UPDATE (3): 26th January, 2012. Just some housekeeping – according to RTE’s Legal Affairs Correspondent, Orla O’Donnell, NAMA was today represented in court by Cian Ferriter SC – details and photo here – and the receivers appointed are David Hughes and Luke Charleton (both from Ernst and Young); PwC, a tenant in the Treasury-owned building beside the National Convention Centre appear not to be involved.
UPDATE: 27th January, 2012. A little more detail emerging today in press reporting. The case on 21st February 2012 is pencilled in to last for four days. According to the Independent, NAMA has PwC as well as Ernst and Young appointed as receivers, which is noteworthy as PwC occupy a landmark building – owned by Treasury – beside the National Convention Centre – which is also owned by Treasury, but not referred to in recent reporting with respect to these receivership actions. The Independent names the following assets as now being “understood” to be under the control of the receivers – “PwC headquarters offices in the IFS, the Montevetro building that is in the process of being sold to Google .. and the Ballymun Shopping Centre” The Examiner has what seems like more credible reporting of the case. It refers to Ernst and Young receivers only, and identifies assets as the Alto Vetro on Barrow Street, Central Park in Leopardstown. It says 22 Treasury companies are involved in the action, and that it is yet to be decided if the four days in February pencilled in for the hearing will be for an interlocutary or a full hearing.
UPDATE: 28th January 2012. The Irish Times today says that PwC has also been appointed as receivers, but that it will not be involved with its own premises in Spencer Dock (next door to the National Convention Centre, both pictured above). So no conflict of interest so! REO (the Treasury controlled company which is also subject to proceedings) has requested the suspension of sharedealings at the London Stock Exchange and has issued a statement which says that NAMA has appointed receivers to nine of its companies, namely
(1) Wintertide Limited
(2) Radtip Properties Limited
(3) Tenderbrook Limited
(4) Sencode Limited
(5) Lornabay Limited
(6) Twynholm Limited
(7) Rigol Limited
(8) Ballymun Shopping Centre Limited
(9) Coolred Limited.
REO goes on to claim that NAMA’s receivers will give 48 hours notice before “initiating any process of sale”. Together with another company, Montevetro II Limited. REO says NAMA is chasing it for amounts totalling €568,828,437. Meanwhile, Treasury is talking itself up with showing it is getting on with business and has announced €1.5m (presumably annual) new rental income from recent rental agreements. Mind you, according to JLL there is still 100,000+ sq ft available at Central Park.
UPDATE: 29th January, 2012. A note of the financial figures at the heart of the Treasury versus NAMA case. It is reported that the loans NAMA acquired from the banks relating to Treasury come to a total of €2bn. It is also reported that NAMA paid €900m for these loans, representing a 55% discount or haircut. It is further reported that of the €2bn of Treasury loans, some €500-900m relate to Johnny Ronan and his own companies; the remaining €1.1-1.5bn (reports vary) relates to Treasury proper and were reportedly acquired by NAMA for €560m. There are also claims that the offers made by MacQuarie and Hines were for €600m and related to the Treasury-proper loans. Since neither NAMA nor Treasury, nor indeed Hines or MacQuarie are commenting, the above might only have the status of speculation and indeed the reporting has confirmed errors – Ronald Quinlan claims NAMA took over Treasury’s loans in November 2009 (a month before NAMA came into being, and some three months before NAMA acquired a single loan). Niamh Horan (or Niamh Whore On, as the feisty Sinead O’Connor might say) bases an entire report on an unnamed “source” and much of it is based on the “feelings” of the “source”. In one account Ronald Quinlan refers to the loans as being worth €2bn with a NAMA acquisition price of €900m, and of these Johnny’s loans amount to €400-500m, and Treasury’s-proper to €1.5bn. In another report Ronald refers to the Treasury loans as being worth €1.1bn. So giant pinches of salt, but having said that, these are the only figures in the public domain.
UPDATE: 30th January, 2012. The are now two Treasury cases registered at the Courts Service, though it seems as if that is just an administrative error as both cases have the same reference – 2012/55 JR. The solicitors on record for Treasury are DAC BEACHCROFT DUBLIN.
UPDATE: 8th February, 2012. In what looks like a whipsaw manoeuvre, Anglo (or rather the Irish Bank Resolution Corporation, IBRC) has appointed receivers to a company in which Treasury has a major stake. The bank is reported to have appointed David Hughes and Luke Charlton from Ernst and Young as share receivers to a company called Tora Company Limited, which is said to have been jointly controlled Treasury Holdings and entrepreneur, impresario and developer Harry Crosbie. The controlling company is called Brossbar Limited. Tora’s main asset appears to be the Wool Store building – pictured here – in Dublin’s International Financial Services Centre in Dublin 1.
NAMA Wine Lake 
Financial bankruptcy meets moral bankruptcy. I wonder what enforcement costs NAMA has factored in for recovering money from Treasury. Forcing the company to lodge security for costs (via new money advanced from the directors) would allow us test their bona fides…
From the Irish Times:
“It will also seek leave for a judicial review to challenge Nama’s right to take such action.”
Aha! I got that one right in one! This will get very interesting. If the judicial review proceeds, the essence of NAMA’s CAB tactics to date will now be adjudged.
Hines has some form with Irish investors/syndicators.
“(GREENWICH, CT) – A partnership of The Willett Companies with Hines, and Warren Private Clients of Dublin, Ireland, has purchased 33 Benedict Place in downtown Greenwich, CT, from Unilever Home and Personal Care. Unilever was paid $87.5 million for the building. ”
http://www.hines.com/press/releases/07-13-05.aspx
If they were funded by NAMA,difficult to whine about the terms now.Much has been made about the purchase price NAMA,paid for the loans and the “offers” below par.Its irrelevant what NAMA paid,what’s owed is the critical factor and what guarantees are in place and are they enforceable.
NAMA should review the sale of REO’s position in TCT,NAMA I understand has the powers to reverse such transactions,specifically if they are not arms length.
@jg, This time last year Hines also entered a JV with NAMA and Sean Mulryan’s Ballymore Homes to develop a site in Birmingham UK. (Well, JV might be a bit generous to Ballymore!) The details are here:
http://www.hines.com/press/releases/4-27-11.aspx
@WSTT,after BPS and the torturous negotiations,false starts,mysterious investors,partners,credibility has to be an issue here.Throw,in the 64 million of mission creep in the acquisition loan at BPS and nerves must be a bit frayed.
As a public vehicle REO,was scheduled to release another set of disastrous results.Inculded in that would have been details on funding from NAMA.
The complexity of the corporate structure,with pages of subsidiaries renders due diligence extremly complex,time consuming and expensive.
Much easier,efficient and effective to have NAMA clean it all up and step in then.Not to mention the reputation risk of doing business, with people who appear so frequently in the all the wrong places for all the wrong reasons.
Agree with comment Re Management at Treasury,Any Official update on Court Proceedings??
@Patrick, just in now courtesy of Orla O’Donnell from RTE tweeting. There will be a hearing on 21st February 2012 where Treasury’s challenge to NAMA’s appointment of receivers will be dealt with. Orla also tweets that Treasury gave NAMA a commitment on 10th of January 2012 when the so-called standstill agreement was given that Treasury would not seek to challenge the appointment of receivers (“ah now, that’s not fair!” comes to mind)
https://twitter.com/#!/Orlaodo
“NAMA says Treasury gave undertaking on Jan 10th that it wouldn’t challenge receivers if NAMA gave 14 day standstill period”
“Treasury Holdings’ challenge to appointment of receivers to some assets by NAMA to be heard Feb 21st”
@patrick nothing on the ‘wires’ yet over here.You would think that NAMA,as a condition of funding,would have dead beat developers sign away their rights to litigate,specifically if they are utilizing Irish Taxpayers money to engage in frivolous and vexations lawsuits.
Regrading senior management,one of the founders achieved the dubious status of persona non grata,given the cast of characterless in NAMA,Johnny over achieved again.
It was reported that he took to his bike,now while cameras are rumored to add a few pounds,his corpulent frame and a road bike appear an unlikely combination.
In order to avoid saddle sores,hope he utilized chamois butter,avid cyclists refer to it as ‘butt butter’ it prevents chafing and soreness.
He is now in for the ride of his life.
“Chamois Butter improves your bicycle riding comfort by putting a clean, non-greasy lubricant between you and your cycling shorts. In addition to making biking more comfortable”
http://circlecitybicycles.com/cbutter.htm
http://www.independent.ie/opinion/analysis/heres-johnny-tycoon-back-in-the-saddle-again-2334546.html
@JG, aah come on, for all the controversy he’s a talented developer – look at the contribution to the transformation of Dublin – the National Convention Centre and a lot of Docklands, Central Park in Leopardstown. But he could certainly do with lighter coloured cycling clothing.
@NWL,Orla’s comment makes a lot of sense, basic 101 work out plan.
Cant have the inmates running around wasting any more of the Irish Taxpayers money.the above comment crossed with your post.
Nothing funny about losing 500M each time you borrow 1000M? I thought your true developer puts in some equity? So wheres all that?
@Gombeenland, with Irish commercial property prices down 65% from the peak in 2007, and with rolled up interest on the original loan, I think it’s fair to say that the equity is long gone.
@JG, off-topic, but the NTMA has today published its investor roadshow material with which it is hoping to attract investment to Ireland. It’s worth a look.
Click to access ntmainvestorpresentation.pdf
a quick peek at the fee’s paid to Treasury by the hopelessly insolvent REO,note 26 linked it.So in summary,for year ended Feb. 2011 fees paid and received from REO amounted to just under 16,000,000.
all i want to do is take your money………..
“Pursuant to the Investment Advisor Agreement, Treasury Holdings earned an investment management fee of £2.1 million for the year ended 28 February 2011 (2010: £4.0m).
Project development and project management fees of £13 million for the year ended 28 February 2011 (2010: £14.9 million) were paid to a company within the Treasury Holdings Group.
The project development and management fees are capitalised in the period they are incurred.
Unpaid fees amounted to £3.6 million at 28 February 2011 (28 February 2010: £3.8 million).
Fees of £697,000 (2010: £608,000) in respect of accounting and administrative services, taxation advice, legal advice and investor relations were payable to Treasury Holdings in respect of agreements with the Company.
Fees unpaid at 28 February 2011 amounted to £178,000 (28 February 2010 £152,000).”
http://www.treasuryholdings.com/news/stockannouncements/real_estate_op/reo_preliminary_results_2011/
“NAMA wanted to put on the record “that NAMA received an unequivocal undertaking from Treasury Holdings that Treasury would not challenge the appointment of receivers if NAMA agreed to a two-week standstill period”
Hmmm…. Not so sure that one will fly. It is my belief that no clause in a contract that restricts a person’s right to sue is valid.
IIRC the tender process for the National Convention Centre was a bit odd. Similar to the mobile phone licenses, I think it was a beauty contest with marks awarded under a variety of headings. An obvious weakness with this is that it’s open to abuse. If you got the weightings, you’d be at a considerable advantage.
I suppose, like the phone licenses, there is no reason to be suspicious.
@Ahura M, The process was deliberately designed to obfuscate. The DDA were masters at it from the very beginning – all the way through to the U2 Tower.
@NWL thank you for that,did Corrigan let the Davy private clients have a preview when he was recently in NY. Again,off topic but regarding NTMA, whats with O’Brien and Carswell at IT,almost knocked over my coffee first thing.
‘First sale of Irish bonds since 2010’…sale to whom,what,where…all that happened was the Irish banks/institutions extended the bond ladder a rung,no sales whatsoever. Absolutely,awful reporting,its actually disinformation.
Take them all down….is NAMA going to manage itself or is the playing field open for the ‘compliant’ elite.
This case Has the Potential To be bigger than the Liam Carroll Saga a few Years back,Surprised that it is receiving little Media Coverage
@Patrick, I wonder. David Daly and his barrister Michael Cush SC seem to have tried many of the arguments last year, and they seemingly failed though David was able to refinance his loans out of NAMA (the Bond Street properties were crucial to that – Treasury sadly doesn’t have much UK property and the Irish stuff has plummeted in value).
https://namawinelake.wordpress.com/2011/06/22/nama-understood-to-have-pulled-plug-on-david-daly’s-albany-homes/
Has Michael Cush conceived new angles in the past six months? Might he argue that NAMA place developers under such duress that they dare not object to NAMA in their early stages of engagement? Might he point to the admission by NAMA (which NAMA wanted placed on the record yesterday!) that it required Treasury to give undertakings about litigation as consideration for the standstill agreement?
I would have said that Treasury is on a hiding to nowhere, that all that has happened yesterday is the same as the foreclosure of David Daly’s assets where NAMA gave undertakings about not disposing of the assets until matters were resolved. Treasury now knows that NAMA is serious, and the hope on NAMA’s part might be that Treasury now toil to get the best possible offer for the assets which would allow Treasury to have some management input in the assets if NAMA sells them. After all, that’s what happened with David Daly, isn’t it?
@Patrick the defendant has a history of being extremly litigious,it’s before the courts so commentators are bound to be a little restrained.
The press love to take someone they built up down,just wait for the scurrilous,scandalous details that will emerge if NAMA prevails.In fact,some journalists are no doubt preparing stories/expose’s now.
@NWL, I am told that David Daly sold his UK Bond Street assets to LV, that Bank of Ireland financed his Irish investments out of NAMA and that Albany Homes remains within NAMA but that he has no PGs relating to Albany.
@WSTT, indeed but in terms of the court case with NAMA which commenced last summer, the initial hearings suggested he wasn’t going to be victorious. I see that there is a costs hearing scheduled for 1st February 2012 in the case, and it will be interesting to see where the costs fall.
EDIT: I should be clearer. The initial hearings in the David Daly and family case, dealt with the an injunction sought by David Daly and family to prevent NAMA from appointing receivers and they failed in that application. The judge also made comments about the fairness of dealings and the fact that the Dalys had not initially objected to the acquisition of their loans by NAMA, and it seemed that the Dalys would be unsuccessful in any review of their treatment at the hands of NAMA, but it is the case that the matter settled between the parties, before the review and fairness could be fully tested. So maybe there are arguments in Michael Cush’s arsenal that have not yet been deployed.
A scurrilous little story doing the rounds in Dublin today. No idea as to its veracity, but don’t ya just love a bit of gossip….
As the tale goes, a few weeks ago Johnny met two representatives from NAMA to discuss the Battersea Power Station in a London hotel. During the negotiations Johnny is alleged to have pulled a phony pistol and pointed it at the head of one the the NAMA executives, saying “Now you know what it’s like to have a gun to your head!” Apparently the NAMA boys did not find it amusing.
I’m sure that it’s not true, but it’s a great story. ;-)
makes complete sense to me,the phony/fake part !
The independent is reporting that Treasury may take this case all the way to the Supreme Court.
And as we all known, if it gets heard by Justice Hardimann, all bets are off. The Nama legislation itself may be invalidated. We just don’t know with that court anymore.
@OMF NAMA has quite a few cards to play here,actually decent hand.
They should/will look into REO selling its holding in the boys China play,TCT.
Some personal guarantees too.This is simply the end game.Expect,plenty of gnashing of teeth,kicking and screaming,posturing and posing but the numbers dont lie,REO is insolvent.
Difficult to argue after receiving funding,that the entity that kindly provided it is invalid,fair enough then pay it back !
It will go to the Supreme Court. Treasury will take it all the way. This is the OK Corral.. the final shoot out. No choices left.
@WSTT very dependent of behavior of other creditors,can they herd all the sheep all of the time…
@jg, No, John. They have run out of road, but a cornered…..
Key is other creditors,suppliers,credit card companies,buying something is out of the question,where would they get the deposit.
Lines will be cut,credit mainly,hope too.
..thousand small cuts…
“This buzz word is derived from the idea that a small cut will not kill you, but if you get enough of them, you could bleed to death…..
Read more: http://www.investopedia.com/terms/d/death-1000-cuts.asp#ixzz1kiC4zVDA
With hardly a developer remaining, who is left to develop and lease the cloud computing facility to Adobe? More particularly, who will fund it?
Something quite ironic about NAMA and NTMA paying rent to a landlord who is challenging them.One wonders without all the rent from the state,if they would be so flush to afford the exhoribant legal fees here.The math is quite simple they are insolvent.
@WSTT some of the talented people from REO,can always set up a new company and attract capital.
@jg, NAMA in common with all the banks is taking a sweep of rents. I wouldn’t have thought that there would be much surplus. It’s one of the reasons the developers are joining the “‘wild geese”. There is literally nothing for them in Ireland other than the NAMA indentured salary – the worst part of which is being subservient to a bunch of mostly imbecilic self important morons, many of whom carry some responsibility for causing this mess.
Not exactly the dream team over there at NAMA,however it’s late night in NY.
Cash talks ….
Does the Agency have the Power to remove JR and RB from Directorships and replace with people more willing to work with the Agency??
@Patrick they just did..there is no ‘Midas’ touch in RE,it’s really about timing.
If it is indeed the the OK Corral and the final shoot out of a broken band then at least they Plan to go down Fighting and not taking the easy path of jumping over to the UK