Legal bids against IBRC to proceed

The Government looks set to row back on its controversial strategy of cutting the legs from legal challenges that have been taken against the liquidated IBRC.

The special liquidator for the bank admitted there were issues with the newly implemented law that stopped legal proceedings from continuing against the dead financial institution.

The liquidator, Kieran Wallace of KPMG, told the Sunday Business Post there were matters that needed to be resolved if, as it stands, IBRC could continue to take cases against individuals but the new law prevented reciprocal actions.

However, Mr Wallace said this would be “dealt with”.

Although there were potential problems if people sue the bank, allowing such cases to progress did not suggest taxpayers could be left liable for additional legal bills.

He said this was because in most cases where a claimant won an award against IBRC, they would simply join the creditors at the now defunct bank. “A lot of historical claims against the bank rank as unsecured creditors,” he said.

“They fall behind preferential and secured creditors. Under current projections there will not be any dividend for unsecured creditors.”

In contrast, Mr Wallace said IBRC would not relent in its pursuit of debtors through the courts. This includes beginning new legal challenges to recover money if necessary.

The largest case taken against IBRC involves the claim by the Quinn family arising from over €2.3bn in loans. This is scheduled to be heard on Mar 7.

However, there are also cases, taken outside Ireland, where junior bondholders have lodged claims against the bank.

The potential U-turn on this aspect of the liquidation legislation emerged as the Government sought to dampen talk of the ECB unpicking its arrangement to transfer the promissory note into long-term bonds.

Junior minister Brian Hayes said it was “utterly ridiculous” to suggest that the ECB was having second thoughts about its unanimous decision to note the Government’s strategy.

“We have an agreement. We have an arrangement. And more importantly the arrangement will lead to significant benefits for this country in the short, medium, and long-term,” he said.

German policymakers had voiced concern that the plan was too close to monetary financing of a country by the ECB. This is not allowed under the rules of the ECB.

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