Firm behind riskiest Anglo Irish debt gives up recovery fight

Lambay Capital Securities went into liquidation last month

The former Anglo Irish Bank on St Stephen’s Green, Dublin: The Quinn family  claims Anglo Irish lent it billions of euro illegally in 2008 to shore up its investment in the bank. Photograph: Frank Miller

The former Anglo Irish Bank on St Stephen’s Green, Dublin: The Quinn family claims Anglo Irish lent it billions of euro illegally in 2008 to shore up its investment in the bank. Photograph: Frank Miller

 

A firm holding the riskiest debt in Anglo Irish Bank has given up a long-fought battle to recover some of the £300 million (€337 million) owed by the defunct lender.

Lambay Capital Securities, a Dublin-based special purpose vehicle, was used in 2005 to raise money for Anglo Irish Bank from international investors by way of the sale of preference shares, a hybrid between debt and equity.

Many of the securities were snapped up by hedge funds at pennies on the pound, when Anglo Irish went into default on dividend payments in 2009 and the lender, by then renamed Irish Bank Resolution Corporation (IBRC), was put into liquidation in 2013.

Last month, Lambay Capital Securities, which had been pursuing the State since 2009 to see if the preference shareholders could recoup some of their investment, was put into voluntary liquidation by its directors as any prospect of return will take years.

The liquidators, Neil Hughes and Dessie Morrow of Baker Tilly Hughes Blake, will attempt to keep enough funds in the firm “for at least two years” in the event there is any chance of a recovery for investors in the meantime, Lambay said in a statement to the Luxembourg stock exchange, where the securities are listed.

Second instalment

The liquidators of IBRC revealed last month that they were preparing to pay within weeks a second 25 per cent instalment of €1.3 billion owed to senior unsecured creditors. The State is the biggest such creditor, at €1.12 billion.

Holders of the stg£300 million of preference shares – which are currently quoted at less than 3 per cent of their original value – stand at the very back of the queue. They rank behind a group of junior bondholders, owned about €300 million, who refused to shoulder some of Anglo Irish’s losses as taxpayers were forced to pump €29.3 billion into the bank during the crisis.

Unsecured creditors’ final recovery depends largely on the outcome of an outstanding legal case between the family of businessman Seán Quinn and IBRC, which has yet to be heard. The Quinns claim Anglo Irish lent them billions of euro illegally in 2008 to shore up their investment in the bank.

‘Material uncertainty’

Lambay Capital Securities, where Brian McDonagh of Marsh Management Services (Dublin) is the longest-standing director, warned in its most recent annual accounts, for 2015, that there was “material uncertainty as to whether the company will be in a position to continue in the medium term to fund the ongoing administrative costs of the company.”

In August, the firm published a series of letters to and from the Department of Finance since Anglo Irish’s 2009 nationalisation, showing its efforts to have an independent assessor appointed to work out whether the preference shareholders can claw back any of their investment.

Mr McDonagh declined to comment when contacted by The Irish Times this week, while the liquidators also declined to comment.