Legal action taken by former Permanent TSB shareholders against the Minister for Finance will be heard in the High Court tomorrow.
If the challenge is successful, then it could have huge implications for the State- owned bank, including its restructuring proposals currently before the European Commission.
The shareholder group is led by Piotr Skoczylas, whose Scotchstone Capital Fund bought €200,000 of Irish Life & Permanent shares in 2010.
This legal challenge hinges on whether the finance minister correctly followed legislation when he nationalised Permanent TSB in 2011.
The shareholders claim:
— The minister was legally precluded from forcibly increasing the capital in PTSB against the decision of the EGM of Jul 20, 2011. However, the minister did illegally force the capital increase;
— The minister was legally required to have the new shares issued at or above the nominal value, which was 32c. However, the minister forced a share issue to himself at about 6c;
— The minister was required to offer shareholders the so-called pre-emption rights but failed to do so;
— The minister was required to buy back all the shares from the existing shareholders at a fair value but failed to do so.
The Government submitted a restructuring plan for Permanent TSB to the commission last year. It proposed the bank be split into a good bank and a bad bank to wind down its troubled assets, and a UK division. A decision is expected by April.
The High Court case is expected to run until Feb 11.
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