The challenge by Treasury Holdings to a decision by the National Asset Management Agency to demand repayment of its loans and appoint receivers over properties has begun at the Commercial Court.

Treasury and 22 related companies were given permission in March to pursue their legal challenge against the decision to call in the loans of around €1bn.

Senior Counsel Michael Cush told Ms Justice Finlay Geoghegan today there were five central issues in the application.

He said the court had to determine whether or not the decision to call in the loans was a public law decision and breached NAMA's obligations as a public body.

He said the decision to demand repayment rather than continue to extend credit to Treasury was at the centre of NAMA's core functions.

Another issue the court had to decide, Mr Cush said, related to Treasury's right to be heard before a decision was made to call in the loans.

He said the court had to decide if NAMA had a duty to act fairly and reasonably in exercising its powers.

He said a further issue related to whether or not NAMA had considered the fact that investors were expressing an interest in the Treasury loan portfolio, before it made its decision.

The court heard that NAMA and KBC Bank have in the past few days made new demands for the repayment of loans made to Treasury Companies.

The demands were served on the guarantors of the loans, including the founders of Treasury; Richard Barrett and Johnny Ronan.

NAMA has claimed Treasury is insolvent, past the point of rescue and has no viable business left without money from the agency.

The case is expected to last at least a week.