Date set for businessman’s challenge to transfer of loans to NAMA

THE legal challenge by businessman Paddy McKillen and several of his companies to the proposed transfer of €80 million “non-impaired” loans to the National Assets Management Agency will be heard on October 5 at the Commercial Court.

The hearing date was earlier this week fixed for October 12 but Michael Cush SC, for Mr McKillen, told Mr Justice Peter Kelly yesterday October 5 would better facilitate both sides. The judge agreed to fix that date, which has been listed to last four days.

The state has described the action as a “very real threat” to the “vital work” of NAMA and has sought for it to be speedily heard. On consent of both sides, it was admitted on Monday to the Commercial Court, which fast-tracks business disputes.

Mr McKillen and 15 of his companies claim their €80m loans from Bank of Ireland are “fully performing” and their transfer to NAMA would have a “drastic and significantly detrimental” impact on their business and property rights. They dispute the loans are “eligible bank assets” under the NAMA legislation and have challenged the constitutionality of sections of the NAMA Act 2009.

Mr McKillen has also expressed “grave concern” about the impact on his reputation internationally of transfer of the loans and about the valuations placed on the loans by NAMA. The state contends the NAMA Act 2009 expressly provides for NAMA to take non-impaired loans and says the fact NAMA would do so was “explicitly recognised” by the European Commission in endorsing the agency.

The case is the first legal challenge to the NAMA legislation. Mr Justice Kelly has directed Mr McKillen’s application for leave to bring the judicial review proceedings will be heard in tandem with the substantive judicial review in a “telescoped hearing”.

Under the NAMA Act, an applicant for leave for judicial review of its procedures has to establish “substantial grounds” for leave. The proceedings are by Dellway Investments, 14 other companies and Mr McKillen against NAMA and the state.

The companies also have loans with Anglo and Irish Nationwide Building Society but the action only relates to the BoI facilities. Mr McKillen has reserved his position relating to the other facilities. A review is continuing as to whether Mr McKillen’s loans with Anglo should be transferred to NAMA. Anglo had opposed the transfer.