IBRC settles action against former Nationwide directors

Resolution involves financial settlement being paid to corporation

The action by the special liquidators to the IBRC had alleged breach of contract, breach of fiduciary duty, and breach of duty of care against the members of Irish Nationwide’s  former board. Photograph: Alan Betson / The Irish Times

The action by the special liquidators to the IBRC had alleged breach of contract, breach of fiduciary duty, and breach of duty of care against the members of Irish Nationwide’s former board. Photograph: Alan Betson / The Irish Times

 

The Irish Bank Resolution Corporation (IBRC) has settled its action against a number of former directors of the Irish Nationwide Building Society.

Mediation in the High Court case has seen a resolution being arrived at that involved a financial settlement being paid to the State-owned corporation, which is in liquidation. The amount involved could not be ascertained last night and it was not possible to contact the parties involved.

The action by the special liquidators to the IBRC, Kieran Wallace and Eamonn Richardson, had alleged breach of contract, breach of fiduciary duty, and breach of duty of care against the members of the society’s former board.

The former directors involved are Michael Walsh, Terence J Cooney, David Brophy and John S Purcell. The former head of the society, Michael Fingleton, is the subject of a separate action. Mr Fingleton was for many years the dominant figure in the society, which collapsed at the end of the property boom and had to be taken into state ownership. Losses at the society were approximately €6 billion. In 2013 the Commercial Court was told that there was an unusual management structure at Nationwide where the board delegated all of its powers by resolution to Mr Fingleton, giving him significant autonomy on lending and decision-making. There was an excessive concentration of powers in his hands, the court heard. A considerable part of the catastrophic losses at the society were from loans for commercial property issued during the boom. The court was told that by 2007 Mr Fingleton should have been sacked if the true state of affairs at the institution had been known. Mr Fingleton ran the society from 1971 to 2009. However, he left “astonishingly little” behind him by way of written record of his actions, the court was told. This made the preparations for the case against the former directors all the more difficult.

The finalisation of the liquidation of the IBRC is set to free up approximately €1.1 billion for the State though a number of complex legal cases, including the mammoth battle with the family of the former billionaire Sean Quinn, remain to be dealt with.

The surplus created by the liquidation process is also likely to mean that unsecured creditors will be paid. The exercise is also expected to mean that €270 million owed to junior bondholders of the former Anglo Irish Bank will also be paid.

The decision to liquidate the IBRC allowed the Government to replace promissory notes with government bonds in an exercise that reduced the deficit by approximately €1 billion per year.

*This article was amended on April 1st, 2015