The High Court in London has been told that the company controlling three top London hotels had been "a very unsteady corporate structure", before the billionaire Barclay brothers acquired €800m of the hotels' debt from NAMA last September.

Developer Paddy McKillen is suing the Barclay brothers over the takeover of Coroin, in which Mr McKillen retains a 36% stake.

Richard Faber, who is a director of a company controlled by the Barclay brothers, described in evidence the events leading up to the transfer to the Barclays of the Coroin debt last September.

He said he had been dealing with "a very unsteady corporate structure ahead of a deadline for a rollover of the debt on September 30. The reality was that the Coroin was in a hopeless position."

Earlier in 2011 Paddy McKillen had been in negotiations with the Barclays over a funding deal for Coroin. But Irish financier, Derek Quinlan, who had established Coroin to acquire top London hotels, entered into an agreement with the Barclay twins to sell his shares to them.

Richard Faber, who has worked for the Barclays for 12 years and who was once married to Sir Frederick Barclay's daughter, told the court that he had written to Brendan McDonagh, the chief executive of NAMA, on February 21 2011, offering to acquire Derek Quinlan's loans.

This gave the Barclays a controlling stake of 64% in Claridges, the Connaught and the Berkely hotels, leaving Paddy McKillen with the remaining 36%. Mr. McKillen says this was in breach of a shareholder agreement which required Mr Quinlan to offer his shareholding to existing shareholders first before selling it to third parties.

Faced with the loan facility running out at the end of September last year, Mr Faber said "it had become clear in the eight months we had been involved that the company was unable to structure a senior loan".

Mr Faber described how he had consulted Sir David Barclay, who had suggested hiring Goldman Sachs. Mr Faber told the High Court today that "hiring Goldman Sachs on August 22 to refinance a £660m obligation in a month was a completely hopeless and futile prospect but the legal rationale was that we should hire them."

Mr Faber added that "we hired Goldman Sachs because that was the advice we were given and because Liam Cunningham [Paddy McKillen's business associate] was keen to do it and we respected that."

"We had various exchanges with Mr Cunningham about various solutions before the September 2011 rollover. Sir David Barclay did part of the drafting. He was very helpful". Richard Faber will continue his evidence tomorrow.

McKillen's e-mails bid rejected

A High Court judge in London has rejected an application by developer Paddy McKillen requesting the disclosure of e-mails written and received by Sir David Barclay.

Mr Justice David Richards ruled today that Sir David could not be compelled to release e-mails relevant to the case because they had been received or sent through an e-mail account controlled by his wife. The Barclay brothers, who live outside the UK, have made it clear that they will not come to court to give evidence in person.

A business partner of developer Paddy McKillen has described "a state of panic in the boardroom" on the day last year when the National Asset Management Agency transferred the debt in three top London hotels to the billionaire Barclay brothers.

Mr McKillen is suing the Barclay twins in the London High Court in a legal battle for control of Coroin, which owns Claridges, the Berkely and the Connaught hotels.

Liam Cunningham this morning told the court that on September 27 2011 "there was quite a state of panic in the boardroom", and that the directors "certainly didn't know it was about to happen".

Mr Cunningham, who runs Mr McKillen's Dublin office, said Coroin felt that NAMA should have consulted the company and that the debt transfer to the Barclay brothers "came as a bolt out the blue".

Earlier, in a witness statement, Mr Cunningham described the transfer of the debt as being a fait accompli. He said in the statement that Coroin was given at most 57 minutes to respond to the proposed transfer by NAMA of the loan facility to the Barclays.