Dáil Éireann Debate, Tuesday - 16 December 2014
228. Deputy Billy Timmins asked the Minister for Finance if the Irish Bank Resolution Corporation junior bondholders will receive payment as part of the liquidation process; if there is a legal requirement to do so; if so, if there are plans to amend the law; and if he will make a statement on the matter. [48287/14]
View answerThe Special Liquidators continue to implement the orderly and efficient wind down of Irish Bank Resolution Corporation Limited (in Special Liquidation) in accordance with the provisions of the IBRC Act and the instructions issued by me under the IBRC Act .
In April 2014, the Special Liquidators announced that the loan sales process had concluded. The sales process of the IBRC loan assets, including their segmentation to meet demand from international buyers, delivered a very positive result with over 90% of the loan assets (with a par value of €21.7bn) sold.
Following instructions issued by me, NAMA are no longer obliged to purchase the unsold IBRC assets at their independent valuation as previously envisaged, as it became clear that the expected proceeds to be raised from the sale of the IBRC loan assets would be sufficient to fully repay the IBRC debt to NAMA.
The Special Liquidators have therefore devised a further sales process in respect of the unsold loan assets so as to maximise the return to all remaining creditors of IBRC, including the State. This sales process is currently underway and the Special Liquidators are unable to quantify at this stage the total sales proceeds that will be achieved from this process.
As the Special Liquidators maximise the proceeds of the liquidation, it is important that they have a comprehensive view of the creditors who ultimately may be entitled to these proceeds. To this end, the Special Liquidators have published advertisements and written to those known creditors in order to finalise their claims in the liquidation. Creditors in the UK and Ireland have until 31 March 2015 to submit their claims and those creditors in the US have until 31 May 2015.
Once all claims have been submitted, they will be reviewed in detail and adjudicated on by the Special Liquidators. In order to finalise this process, further information may be sought from some creditors in order to validate their claim.
The Special Liquidators are unable to comment at this stage both on the level of proceeds that will ultimately be generated from the liquidation and on the level of valid creditor claims that will ultimately be received in respect of the liquidation. It is the balance between the proceeds generated by the liquidation and level of valid claims received and approved that will ultimately determine the dividend to which each creditor may be entitled. The ultimate level of dividend, if any, paid to each creditor cannot be known until such time as the sales processes are complete, the total level of adjudicated creditors is finalised and the other contingent creditor claims which may crystallise, including those from litigation, are known.
It is understood that for the payment of proceeds from the liquidation, preferred creditors and senior unsecured creditors will rank in priority to the holders of subordinated debt. The priority for the distribution of assets under the Companies Acts is generally:
i. costs and expenses of the ongoing liquidation;
ii. preferential creditors, including certain taxes and employee and pension claims arising prior to the date of liquidation (these claims are certain to be paid in full)
iii amounts owing to NAMA under the Facility Deed acquired from the Central Bank which were secured by a floating charge over the banks assets (this debt is now fully repaid and so the floating charge is now released)
iv. unsecured creditors, including:
- Debts owing to the Minister/NTMA under ELG and to DGS
- Unguaranteed debt/depositors (including holders of tracker bonds etc.)
- Unknown, including:
- Local authority development bonds
- Suppliers/other normal unsecured creditors
- Employees that are not preferential creditors
- Contingent creditors and other potential costs principally relating to litigation etc
v. subordinated creditors
vi. Members of the company - the Minister currently holds 100% of all shares and preference shares in the company.
