PTSB shareholders cannot amend court action

Shareholders of Permanent TSB who wish to challenge the constitutionality of laws under which the State has recapitalised the institution with €4bn cannot do so by amending their existing court proceedings, the High Court has ruled.

Mr Justice Peter Charleton said the proposed challenge to sections of the Credit Institutions Stabilisation Act 2010 would have to be brought in separate plenary proceedings as it cannot be pursued by amending the action initiated in 2011 by the shareholders.

In that action, Piotr Skoczylas, his company Scotchstone Capital Fund Ltd, Gerard Dowling, and Padraig McManus, have challenged the 2011 direction of the minister for finance to inject €2.7bn into the former Irish Life & Permanent, now Permanent TSB.

They claim the direction order was not appropriate or reasonable in relation to their position as shareholders and the money could have been sourced elsewhere. As a consequence of the minister’s action, their shareholding value was, but should not have been, written down from around 33c per share to 1c, they claim.

Although an EGM of IL&P Group Holdings plc, the holding company for IL&P plc, voted 60/40 in Jul 2011 against the minister’s intervention, the minister secured the direction order from the High Court on Jul 26, 2011. The €2.7bn capital injection was then made, followed by another €1.3bn in Mar 2012.

In Mar 2011, Mr Skoczylas and the other shareholders initiated their proceedings as a challenge to the earlier €2.7bn injection and the fall in value of their shareholdings. Their full action has yet to be heard.

Mr Justice Charleton also dealt with an application by Permanent TSB Group Holdings plc and Permanent TSB plc to be joined as notice parties to the case on grounds they have a vital interest in ensuring the direction order is not overturned.

He ruled there was no need for Permanent TSB to be joined to the case unless the court got to a point in the main action where it was considering substituting the direction order for a new order.

The judge further ruled that a separate challenge to the recapitalisation by investment fund Horizon Growth NV should travel with the shareholders’ case. Horizon bought six million shares in IL&P in 2011.