IBRC liquidation fees hit €222.6m as creditors forced to wait

Liquidators have €1.9 billion of cash after paying initial dividend to creditors in 2016

IBRC has a remaining loan book of €3.7 billion, according to the latest liquidation progress report. Photograph: Alan Betson

IBRC has a remaining loan book of €3.7 billion, according to the latest liquidation progress report. Photograph: Alan Betson

 

Creditors of Anglo Irish Bank and Irish Nationwide will have to wait years to find out whether they will recover all that they are owed, as the cost of liquidating the institution that was established to wind down the failed lenders has soared to €222.6 million.

The liquidators of Irish Bank Resolution Corporation (IBRC) said on Friday that they held €1.919 billion of net cash as of February 6th, the fourth anniversary of the Government’s decision to liquidate the company. However, they said the exact dividend for “unsecured creditors will not be known for a number of years, primarily as a result of the large level of litigation outstanding”.

This follows a move last year to return 25 per cent of what was owed to unsecured creditors, led by the State, which has a claim in for €1.1 billion.

Unsecured creditors’ final recovery depends largely on the outcome of a legal case between the family of businessman Seán Quinn and IBRC, which is not expected to be heard until next year at the earliest, but more likely in 2019 or 2020. The Quinns claim Anglo Irish lent them billions of euro illegally in 2008 to shore up their investment in the bank.

The liquidators currently estimate that unsecured creditors will receive between 75 per cent and 100 per cent of what they are owed.

Junior bondholders

However, at the back of the queue are a group of junior bondholders, owed €285 million, who refused to share in Anglo Irish’s and Irish Nationwide’s losses at the height of the crisis.

All told, the liquidators received 3,000 claims from creditors last year, of which 2,100 have been reviewed and adjudicated, with the remaining either being considered or queried.

IBRC is a defendant in 143 legal cases. It has a remaining loan book of €3.7 billion, according to the latest liquidation progress report.

Meanwhile, the liquidators estimate that “less than 50” customers of the group have been affected by potential overcharging as they were denied a right to return to a low-cost mortgage that tracks the European Central Bank main rate after a period on a fixed rate. That’s after the liquidators sold the bulk of IBRC’s mortgages, mainly comprised of Irish Nationwide loans, in 2014.

The liquidators will start communicating in the coming months with an estimated 6,500 customers who were overcharged interest by Anglo Irish Bank. Kieran Wallace of KPMG, one of the joint liquidators, said in court documents last year that this may lead to a potential total refund of about €100 million.

The liquidators will also have to engage with third parties and the National Asset Management Agency, which acquired loans from IBRC in the past seven years, as part of the process. This has increased the complexity surrounding remediation, they said.

The liquidation of IBRC resulted in a further €32.2 million of professional fees being paid over last year from the assets of the company, bringing total fees over the first 47 months of the wind-down to €222.6 million.

The report showed that the team in KPMG in charge of liquidating IBRC has received €128.1 million to date, though it has paid back €5 million of this. The main legal advisers, A&L Goodbody, have received more than €37 million, of which €2.7 million has been returned.

Other law firms, including Linklaters, Arthur Cox and Maples and Calder, as well as real-estate advisers at PricewaterhouseCoopers, Deloitte and Savills, have been among the main companies to generate fees from the liquidation, according to the report.