Saturday 23 September 2017

Creditors hit for €3bn by quick Anglo wind-down

David Drumm fled to the US after the collapse of the Anglo Irish Bank
David Drumm fled to the US after the collapse of the Anglo Irish Bank
Peter Flanagan

Peter Flanagan

THE former Anglo Irish Bank will leave even more creditors out of pocket than expected as a result of it being wound up so quickly.

When the Government moved to have what became the Irish Bank Resolution Corporation (IBRC) wound up immediately last February, it effectively closed it down seven years earlier than planned.

That means the bank will not be able to access about €3bn worth of funds that had been set aside by the State to cover the cost of a gradual wind-down of the business.

While senior bondholders and depositors will not be affected by the shortfall, many firms that provided services to the bank are expected to be hit.

Among the losers are as many as 120 litigants suing the bank and 16 customer-owned lenders who bought an equity-linked bond from Anglo's private bank.

Finance Minister Michael Noonan said last month it was still too early to put a value on Anglo's remaining assets.

"There's less meat on the carcass of the dead bank for creditors to share than they might have thought," said Lorcan Roche Kelly, chief Europe strategist at Trend Macrolytics.

There is "no prospect" of the Government injecting more funds to make up the shortfall, he added.

Meanwhile, the special liquidators of IBRC have begun writing to the bank's borrowers to update them on the sale of their loans and collateral obligations.

Kieran Wallace and Eamonn Richardson of KPMG will also give borrowers a chance to "make written representations on the method of disposal of their loans and the criteria for determining who may bid for their loans and collateral obligations".

The letters will be sent this week in tranches.

A spokesman for the liquidators confirmed that any loans that did not receive an adequate bid would be transferred to NAMA unless Mr Noonan says otherwise.

Obligations

"It is currently anticipated that the substantial majority of IBRC loans and collateral obligations will be offered for sale by way of large loan portfolios.

"This is because of the scale of the process and the size of the IBRC loan book, the time objectives and the framework for the sales process as set out in the ministerial instructions to the special liquidators, the need for efficiencies and the special liquidators' objective of maximising sales realisations in the public interest.

"It is anticipated that a relatively small number of loans and collateral obligations may be offered for sale individually and/or offered for sale with the loans and collateral obligations of other borrowers with whom there is an economic or legal connection," the spokesman added. (Additional reporting by Bloomberg)

Irish Independent

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