Special liquidator a first in State’s history
However, these are extraordinary times and IBRC is no ordinary institution. The bank was already in winddown mode. It was scheduled to run down its loan book between now and 2020.
But to accommodate the restructuring of the €31bn in promissory notes, it had to be liquidated immediately.
The special liquidator is Kieran Wallace from KPMG. In many ways his role and responsibilities will be similar to a normal liquidation, except in this case he will report to the minister for finance, and not the courts.
His first task was to inform the 800 staff their jobs no longer existed.
In the event of a liquidation, the functions of the board of directors are transferred to the liquidator. It is believed that Mr Wallace had to sign a number of affidavits yesterday on behalf of the board in relation to legal cases the bank is involved in. These cases now become his responsibility.
For instance, IBRC is taking legal action against the Quinn family to recoup €2.2bn in loans. But the Quinn family is taking legal action against IBRC. According to the Government’s emergency legislation introduced to liquidate IBRC, section 6, subsection 2a, stipulates that all outstanding legal cases against IBRC are now ceased. Further action is not possible without the permission of the courts.
One leading insolvency practitioner questioned whether this was compliant with the constitution.
Mr Wallace will also have to oversee the transfer of IBRC’s loan book to Nama over the next six months. It is the Government’s intention that these loans are put up for sale to all interested parties. The remaining loan book will have to be valued before it is transferred to Nama. If there is a shortfall between the transfer value and the book value, then the Department of Finance will have to make up the difference.
If there is a surplus then it would go to IBRC, and Mr Wallace would divide it among creditors.
However, his immediate priority remains overseeing the redundancy of bank employees. Most will be offered one-month rolling contracts before being offered more permanent positions with Nama.
