THE Attorney General has told the High Court property investor Paddy McKillen has total loan exposure of €2.1 billion to participating institutions in the National Assets Management Agency and has admitted he is unable to repay certain loans which have expired.
It was “an inescapable fact” those loans were impaired and non-performing, AG Paul Gallagher said.
Mr McKillen has not given a date when he can pay the €2.1bn and one did not need to be an expert to see the risk involved, Mr Gallagher said. NAMA could not be held up because Mr McKillen wanted a “reasonable” time to try and secure refinancing which he had so far failed to obtain.
As a matter of law, Mr McKillen had to repay loans which had expired and on his own testimony he could not, Mr Gallagher said.
“What else is that but impaired?”
The fact there was “forbearance” by banks towards Mr McKillen was not relevant, as banks had not wanted to write on their balance sheets that loans were impaired, Mr Gallagher added. It was “quite amazing” experts for Mr McKillen did not address these matters in their evidence.
Mr Gallagher, who drafted the 250-section NAMA Act 2009, was continuing submissions for the state in opposing the action by Mr McKillen aimed at preventing the transfer of his loans to NAMA.
The case relates to Mr McKillen’s Bank of Ireland loans – which he estimates at €211m but NAMA puts at €297m – but the outcome has implications for Mr McKillen’s entire €2.1bn loans with the five participating institutions in NAMA. That portfolio includes €800m loans with Anglo Irish Bank.
Yesterday, Mr Gallagher completed a forensic analysis of sections of the NAMA Act and then addressed a range of matters in affidavits for both sides.
The AG said it was “of very serious concern” there was non-disclosure “of a material kind” by Mr McKillen of matters about his borrowings and loans when he initiated his challenge to the takeover of his loans by NAMA. Even before NAMA came into being some of Mr McKillen’s loans had expired, he said.
The “elephant in the room” was that, while his experts were saying Mr McKillen was a good borrower with just “technical defects” in some loans, if a loan had expired, there was an obligation to repay and that had not been done.
The case continues on Tuesday.
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