Challenge to new IBRC Act may be imminent

Legal sources speculated yesterday that a challenge to the constitutionality of the new IBRC Act may be imminent.

The implications of the far-reaching legislation came up for mention in the Commercial Court where its implications for ongoing cases were discussed.

Lawyers for the family of bankrupt businessman Seán Quinn expressed concern yesterday about the implications for their action against IBRC, formerly Anglo, of the different treatment in the Act of those suing Anglo and those being sued by it.

The Act imposes an immediate stay on all existing actions “against” IBRC but provides for no stay on actions “by” the bank. That distinction could yet lead to the family (whose case alleging Anglo unlawfully “shovelled” €2.34 billion loans into Quinn companies has yet to be heard) or others bringing a constitutional challenge to the Act, sources speculated.

At the Commercial Court yesterday, when Mr Justice Peter Kelly was dealing with the separate case by IBRC against some members of the Quinn family, he remarked the IBRC Act appears to give no power to the courts to lift the statutory stay in the Act halting all existing proceedings against IBRC.

The stay is “in absolute terms” and the Act disapplied the court’s discretion to lift it, the judge said.

There was “a very wide definition” of legal “proceedings” in the Act.

Existing proceedings

There are many existing proceedings against IBRC before the Commercial Court. They include the action by Patricia Quinn and her five children alleging they are not liable for €2.34 billion loans to Quinn companies in 2008 on grounds they were unlawfully made to shore up the bank’s plummeting share price.

That action is for mention before Mr Justice Kelly on Monday, when the IBRC liquidator will be represented.

Yesterday, Martin Hayden SC, for the Quinns, indicated some of the family’s concerns about the new Act.

‘Sanitise’ their claim

He said his main difficulty in persuading the court the family’s case could proceed was that the Act appeared “to sanitise” their claim Anglo had breached Section 60 of the Companies Act – it makes it unlawful for a company to advance loans to buy its own shares – in making the €2.34 billion loans.

Counsel said the Section 60 issue was also raised in the defence of various members of the Quinn family to IBRC action against them alleging they conspired with others to move property assets in the Quinn international property group beyond the bank’s reach.

The new Act raised “many areas of complexity” and drew a distinction between those being sued by the bank and those suing it.

As it provided for an immediate stay on proceedings against Anglo with no ability for the court to lift that stay, that raised issues for the security held by IBRC over Quinn properties, he said.

There would be “a lot of difficulties” arising from the legislation.

Mr Justice Kelly said the family’s case would be before him on Monday. What was before him yesterday was a procedural matter in the separate action by IBRC alleging various Quinn family members conspired to put assets in their international property group beyond the bank’s reach.