The Irish Supreme Court dealt a surprise blow to Ireland’s “bad bank,” a fund set up to take on and ringfence toxic loans, ruling Thursday it had illegally seized control of a property tycoon’s euro2.1 billion ($2.9 billion) in debts, The Associated Press reports.
Ireland’s highest court ruled 7-0 in favor of Paddy McKillen, the first developer to sue the National Asset Management Agency. The NAMA chairman, Frank Daly, called the judgment “obviously a disappointment.”
The government created NAMA in 2009 to prevent the nationalization or collapse of five Dublin banks, all of whom had loaned billions recklessly to an elite of Irish property barons. NAMA over the past year has purchased more than euro71 billion ($98 billion) in bad loans from those banks at massive discounts — with a mission to force the debtors to liquidate assets and repay at least some of the bill.
McKillen, who has 15 companies and stakes in properties worldwide including three of London’s top hotels, was among the 10 biggest debtors targeted by NAMA.
But the Supreme Court ruled in his favor, saying NAMA’s actions against him were initiated before legally permitted. The ruling triggered spirited debate in Dublin financial circles over whether the judgment would encourage other construction kingpins facing financial ruin to also sue NAMA and complicate Ireland’s already tortuous efforts to stabilize their cash-strapped banks.
