The Eligible Liabilities Guarantee (“ELG”) scheme cost is expected to be incurred in 2013. It is estimated that there could be payments under the ELG of c. €0.9 to €1.1 billion. The ELG scheme provides an Irish State guarantee for specific issuances of eligible debt securities by participating institutions and for specific deposits placed with participating institutions. In assessing the impact of this liquidation, it has been assumed that ELG costs of €1.0 billion arise in 2013, i.e., the midpoint of the circa €0.9 billion to €1.1 billion estimated range. There may be a further cost for the Exchequer if it is necessary to make up any difference that might arise between the consideration paid by NAMA for IBRC’s assets and the valuation placed on those assets by the Special Liquidators:
-If the value of the assets sold is not sufficient to compensate NAMA for the bonds it has issued it will be necessary to reimburse NAMA for the shortfall.
-If the value of the assets is greater than the net outstanding borrowings under the Facility Deed, the Special Liquidators will retain the surplus assets for the benefit of unsecured creditors.
Any remaining assets after the unwinding of all secured liabilities will be available for the benefit of the pool of unsecured creditors (including for the Minister for Finance arising from payments made under guarantees, unguaranteed bondholders, suppliers, and sundry liabilities). Whether payments are made to unsecured creditors will depend on the disposal value of IBRC’s assets.