Nama earlier this year brought proceedings against Treasury, Mr Barrett and Mr Ronan over the TAIL transaction where €20m shares were allegedly transferred out of the group to the benefit of Mr Barrett and Mr Ronan for €100,000 and unsecured loan notes.
Since then, Treasury has been wound up and joint liquidators appointed. They now want Treasury to be a plaintiff, rather than a defendant, in the case.
If the liquidators application is granted, Treasury would be the “enemy” of the defendants, rather than their ally, Mr Justice Peter Kelly observed yesterday.
The case was before the judge to address discovery issues but he agreed to adjourn those pending the outcome of the liquidators’ application next week.
Nama, which acquired €1bn of Treasury’s €2.7bn loans in April and May 2011, after the TAIL transaction of Mar 22, 2010, claims there was no commercially valid reason for that transaction made when Treasury was either insolvent or in very difficult financial circumstances.
The transaction was for “a significant undervalue”, impaired the rights and interests of Nama as the major creditor of Treasury and was made with the intention of defrauding bank and/or other creditors of Treasury, it alleges. In entering into the transaction, Mr Barrett and Mr Ronan failed to act in the best interests of Treasury and/or its creditors, breached their fiduciary duty to the company and creditors and breached the Nama Act, it is claimed.
In an affidavit, John Bruder, managing director of Treasury, said the TAIL transaction was not illegal and there was a valid commercial reason for it. He argued Nama’s handling of Treasury’s efforts to sell the group’s Nama loans had damaged efforts to reach agreement on the issue.
In the transaction, €20m shares in China Real Estate Opportunities (CREO) were transferred by three Treasury subsidiaries into another Treasury subsidiary, Daylasian, for unsecured 10-year loan notes with a face value of €18.4m.
Nama alleges on the same date, the defendants caused Treasury to transfer its interest in Daylasian to Mr Barrett and Mr Ronan for €100,000, leaving Treasury with an unsecured loan note instrument from what was no longer a group company.
On that date, the market value of the CREO shares greatly exceeded €100,000 plus the market value of the unsecured loan notes issued by Daylasian to the Treasury subsidiaries involved, Nama claims.
Daylasian changed its name to Treasury Asian Investments Ltd (TAIL) on Apr 22, 2010.