Belfast-born developer Paddy McKillen has promised to pay the Republic’s National Assets Management Agency (NAMA) damages for any financial losses it suffered as a result of delays caused by his legal challenge to Ireland's toxic bank.
Mr McKillen has launched the landmark legal action against NAMA, challenging the transfer of loans his company borrowed from Bank of Ireland to the so-called bad bank.
NAMA was set up by the Irish government in response to the property crash which has crippled the Republic’s banks.
It was set up to purchase €80bn (£67.5bn) of toxic assets — including €5bn (£4.2bn) from Northern Ireland — from five banks; Anglo Irish, Allied Irish, Bank of Ireland, ESB and Irish Nationwide. It is funded by the Irish taxpayer.
Yesterday in the Commercial Court in Dublin, NAMA demanded a pledge from Mr McKillen that he would pay damages for any losses it suffered as a result of not being able to take over his loans. Under the 2009 NAMA Act, anyone wishing to challenge the agency must agree to compensate it if their defence fails.
The promise-to-pay damages issue lapsed this week after NAMA told Mr McKillen that it would not transfer any of his loans pending the outcome of his judicial review proceedings, the first challenge against NAMA, which will be heard in Dublin’s High Court in October.
Mr McKillen claims that the transfer of his loans will result in “irreparable” prejudice that could not be remedied by way of damages to his companies.
He will argue that he is a property investor rather than a developer and will claim his loans are not suitable for transfer to NAMA as they are commercial rather than land and development loans.
The litigation comes as Mr McKillen's Maybourne Hotel Group is locked in talks to refinance some €700m (£591.3m) in bank loans split between Anglo and Bank of Ireland.