Cantillon: Epitaph for Anglo Irish Bank outside Delaware court

The American state of Delaware is an unusual battleground for the latest skirmishes over the special liquidation of the former Anglo Irish Bank, now Irish Bank Resolution Corporation (IBRC).

Companies like the east-coast state because of how easy it is to set up companies and conduct business there. About 60 per cent of publicly quoted companies in the US are registered in Delaware.

On Tuesday, Delaware bankruptcy judge Christopher Sontchi dealt with matters in quick-fire speed in IBRC's attempt to secure protection and safeguard about €1 billion of assets the bank has in the US.

Facing attack from Irish developer John Flynn and US billionaire Paul Singer, whose funds are seeking to call in $75 million (€55.5 million) of subordinated debt, the judge extended temporary protection until a full hearing to decide whether the US court should recognise IBRC's special liquidation status in Ireland. This puts Flynn's overcharging case against the bank on ice.

The judge refused an application by two funds linked to Singer's US hedge fund Elliott Management seeking discovery of a wide range of Irish Government documents that would provide more details about the emergency liquidation of the bank in February. Judge Sontchi ruled it was "premature" to permit the funds perform a forensic analysis of the decision-making behind the Government's legislation winding up the bank.

The soft-spoken Flynn took the stand for just a short time during Tuesday’s five-hour hearing, answering questions only to confirm his status as a US resident.

Other interesting details emerged. During his cross-examination, IBRC special liquidator Kieran Wallace of KPMG, who had flown in from Ireland, revealed details of fees paid to his firm (€5 million since February). He also said he had not drawn any of a €1 billion loan facility Nama had granted to the bank for the liquidation.

Outside the Delaware courthouse is a statue to a former Irish-American mayor of Wilmington. Inscribed on the monument are the words of WB Yeats: “Think where man’s glory most begins and ends, and say my glory was I had such friends.”

It’s a fitting epitaph for the once golden relationship between Anglo and its borrowers broken by the property crash and now by fresh revelations about more than a decade of overcharging.