Developers are engaging leading tax advisors to construct a series of barriers to thwart NAMA’s efforts in chasing down the assets securing up to €90 billion in development loans and setting up a titanic confrontation with the State. Minister for Finance Brian Lenihan hopes that enabling legislation will be enacted over the summer month’s bringing the National Asset Management Agency (NAMA) into play but continued delay is allowing developers time to build elaborate defences. Yesterday marked the deadline for Irish banks and building societies to report with a detailed breakdown of their property and development loan portfolios, allowing the National Treasury Management Agency its first chance to cross check loan syndicates involving several banks and examine the degree to which sloppy lending allowed some developers to double up debt on the same assets.

Central to the titanic struggle about to play out in the courts is not just the land and development sites secured against development loans but the vast property empires held elsewhere by developers and exposed to NAMA by personal guarantees to make good the debt. Tactics include;

Quite how NAMA will be in a position to unravel these and other defensive stratagems remains to be seen. Existing legislation contains rules that allow courts in certain circumstances to unravel steps taken by debtors where those steps are taken purely to defeat creditors but it is legal ground infrequently travelled. What’s clear is that NAMA will be faced with very substantial organised defences headed by highly paid and expert tax barristers in an unprecedented battle between the State and Ireland’s most powerful business forces, including doctors, accountants, solicitors and other professionals who banded in groups and speculated in property late in the game. At stake will be the stability of the public finances pitted against the ephemeral nature of personal guarantees. Defeat of NAMA on these transactions will open up a wide scale increase in taxation across the economy and steep cuts in spending on vital state services. This pits ordinary working families directly against a small number of hugely wealthy developers and their advisors and a wider group of late arrivals scattered throughout the professions.

The Department of Finance will need every resource it can call upon to ensure that NAMA’S legislative powers extend to unravel the complex steps now being taken to secure the assets of developers. What’s at stake is the shoring up of the massive extra borrowing the State is about to take on in hoovering up to €90 billion in loans across to NAMA from Ireland’s crippled banks to allow them a fresh start and break the stranglehold of the credit crunch across the economy, especially to vital small and medium sized businesses to prevent further wholesale job losses.