High Court approves complex €46m settlement

A High Court judge has approved a complex settlement of an action brought by Nama and others against Treasury Holdings’ co-founders Richard Barrett and John Ronan over a controversial €20m transaction involving the alleged transfer of shares out of the group at a significant undervalue.

The settlement will realise a minimum €46m, and perhaps €47m, for the liquidation and unsecured creditors of Treasury, of whom the largest are Nama, owed €1bn, and KCB Bank, Mr Justice Peter Kelly noted.

Mr Barrett will benefit by about €4m net cash under the settlement while Mr Ronan will benefit by about €3m arising from a distribution to him from the winding up of the TAIL (Treasury Asian Investments Ltd) shareholding under the settlement. Mr Ronan holds 25% of TAIL.

While the court was always concerned when defendants against whom serious allegations are made were not walking away empty handed, this settlement was in the best interests of the liquidation and was legally and commercially justified, the judge said.

While he would prefer the defendants were not benefitting, the liquidator had had to involve them in the totality of the settlement, he added. Mr Barrett appeared to have been involved in negotiating elements of the deal and the legal costs of the defendants would also be met by themselves, he also noted.

The judge yesterday granted the application by Rossa Fanning, counsel for Treasury’s joint liquidators, to sanction the settlement having earlier secured clarification of various issues from Michael McAteer, one of the joint liquidators appointed after Treasury was wound up in 2011 with debts of €2.7bn.

Declan Murphy, counsel for Nama, said it supported the settlement.

Had the case gone to trial and the plaintiffs won, they would have then had to unwind the TAIL transaction and sell shares in another jurisdiction with all the risks that carried, he noted. The settlement also addressed another controversial transaction, the €2.26m ManCo transaction, which was not subject of this litigation.

Although he considered there was only a small risk of losing the case had it gone to trial as scheduled in October, the judge said he was told even victory at trial would not realise as much as under this settlement.

Mr Justice Kelly was asked last Friday to approve the settlement but he raised concerns about aspects of it and deferred his decision.

The liquidators, the company and Nama were all plaintiffs in the action against Mr Ronan and Mr Barrett over the TAIL transaction of Mar 22, 2010, 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.

The settlement also addresses the ManCo transaction, alleged by Mr McAteer to be linked to the TAIL transaction.

It is claimed ManCo was carried out on Aug 24, 2012, immediately before the winding up petition was presented for Treasury.

The defendants had denied the claims.

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