THE LEGAL challenge by businessman Paddy McKillen and several of his companies to the proposed transfer of €80 million “non-impaired” loans to the National Asset Management Agency (Nama) will be heard on October 5th at the Commercial Court.

The hearing date was earlier this week fixed for October 12th but Michael Cush SC, for Mr McKillen, told Mr Justice Peter Kelly yesterday October 5th would better facilitate both sides.

The State has described the action as a “real threat” to the work of Nama and has sought for it to be speedily heard. On consent of both sides, it was admitted to the Commercial Court.

Mr McKillen and 15 of his companies claim their €80 million loans from Bank of Ireland are “fully performing” and their transfer to Nama would have a “detrimental” impact on their business and property rights.

They dispute the loans are “eligible bank assets” under the Nama Act and have challenged the constitutionality of sections of the Act.

Mr McKillen has also expressed “grave concern” about the impact on his reputation internationally of the transfer of the loans.

The State contends the Nama Act expressly provides for Nama to take non-impaired loans and says the fact Nama would do so was “explicitly recognised” by the European Commission.

The case is the first legal challenge to Nama. Mr Justice Kelly has directed Mr McKillen’s application for leave to bring the judicial review proceedings will be heard in tandem with the substantive judicial review. Under the Nama Act, an applicant for leave for judicial review has to establish “substantial grounds” for leave.

The proceedings are by Dellway Investments, 14 other companies and Mr McKillen against Nama and the State. The companies also have loans with Anglo Irish Bank and Irish Nationwide Building Society but the action only relates to the Bank of Ireland loans. Mr McKillen has reserved his position relating to the other facilities.

A review is continuing as to whether Mr McKillen’s €800 million in loans with Anglo Irish Bank should be transferred to Nama. Anglo had opposed the transfer.