State to get €275m payout from IBRC

The liquidators of Irish Bank Resolution Corporation (IBRC) are set to issue an initial payment to unsecured creditors within a fortnight, including a cheque of about €275 million for the State.

However, a group of junior bondholders in the bank, who refused to share in the group’s losses during the crisis, face waiting at least two years before they discover how much of the €285 million they are owned will be repaid.

The liquidators, Kieran Wallace and Eamonn Richardson of KPMG, said in a progress update report in May that they expected unsecured creditors ultimately to receive between 75 per cent and 100 per cent of their claims.

The Government's claim stands at €1.1 billion as a result of money it paid to depositors under State guarantee when IBRC, formerly Anglo Irish Bank and Irish Nationwide, was put into wind-up in February 2013.

Legal battle

However, the junior bondholders stand at the back of the queue and are unlikely to receive anything before a legal battle between the family of businessman Seán Quinn and IBRC is heard, in 2018 at the earliest. The Quinns claim that the lender, then known as Anglo Irish Bank, lent them billions of euro illegally in 2008 to shore up their investment in the bank.

A victory for the Quinns would see them join the list of unsecured creditors.

All told, at the time of IBRC’s liquidation, the group owed about €5 billion to unsecured creditors. However, almost €3 billion of this was made of intergroup borrowings between various units.

The liquidators were sitting on €2.2 billion of net cash as of February after selling off most of the group’s loan book.

The payment expected to be made in the next two weeks will represent 25 per cent of admitted unsecured creditors, excluding the junior bondholders.

Most junior bondholders in Anglo and Irish Nationwide accepted losses of up to 80 per cent of their investment between 2009 and 2010, sharing of the rescue bill for the now-defunct lenders, which cost taxpayers almost €35 billion. However, a group of subordinated bondholders held out.

Loan book

In response to a parliamentary question earlier this month, Minster for Finance Michael Noonan said IBRC's liquidators still faced a number of tasks, including the ongoing management of about 350 legal cases and a remaining loan book of about €3.7 billion.

The liquidators are also working with the commission of investigation, set up last year, into all transactions between Anglo’s nationalisation in January 2009 and the company’s liquidation in 2013 which resulted in a loss of at least €10 million to taxpayers.

The commission was set up in the wake of controversy over IBRC’s sale of engineering services company Siteserv for €45 million to businessman Denis O’Brien. The deal took place after IBRC wrote off more than €100 million of Siteserv’s debt.