Hedge funds drop objection to IBRC’s US bankruptcy move
Challenge withdrawn after court blocks access to bank’s contacts with Government
A legal challenge in Delaware will proceed to a full hearing in an attempt to block IBRC from securing permanent protection in the US courts. In preparation for this, one of IBRC’s special liquidators, Kieran Wallace (above) of KPMG, will be questioned under oath at a deposition on October 22nd in New York. Photograph: Brenda Fitzsimons/The Irish Times
The funds, associated with Mr Singer’s Elliott Management, withdrew their challenge to the petition yesterday after the Delaware bankruptcy court blocked their request for access to official records revealing the Government’s decision-making behind the emergency liquidation of the bank in February.
In a brief document filed in court, Burlington Alpha and Burlington Beta, holders of $75 million (€55.4 million) of the bank’s subordinated bonds, gave no reason for pulling their case against the bank now called Irish Bank Resolution Corporation.
Elliott had challenged the bankruptcy petition and sought to investigate the political decision-making behind the fast-tracked wind-down of the bank in the overnight passage of legislation by the Dáil.
Delaware bankruptcy judge Christopher Sontchi said on Tuesday that he was “not inclined, at least for now, to perform a forensic analysis of Ireland’s legislative and executive departments”.
They claim it disadvantages them as creditors in favour of the State and argue that the bank was solvent when put into liquidation.
On Tuesday the court also refused to lift temporary protection to allow Mr Flynn to proceed with his lawsuit in New York claiming he was overcharged $11 million. The liquidators dispute the overcharged amount.
Mr Flynn’s challenge in Delaware will proceed to a full hearing in an attempt to block the State-owned liquidated bank from securing permanent protection in the US courts.
Solicitor for the special liquidators, Mark Traynor of A&L Goodbody, will be deposed in the same offices later that day. Details of the depositions were disclosed in filings made to court yesterday.
IBRC applied for court protection in August under Chapter 15 of US bankruptcy law, which permits foreign companies to have overseas liquidation recognised in the US courts.
The bank brought the petition to safeguard about €1 billion in US assets from legal actions.
Elliott’s decision to drop its objection to IBRC’s action is out of character with the company’s aggressive track record in the pursuit of distressed debt.