Monday 26 September 2016

Tanaiste vows government will go to court to prevent payment of junior bondholders

Published 09/06/2015 | 19:15

Joan Burton
Joan Burton

Junior bondholders who insist they are owed €270m by the troubled IBRC bank must be confronted in the interests of the taxpayer, the Tanaiste has said.

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Joan Burton has vowed the Government will exhaust “every legal route possible” to ensure they are not paid.

And she insisted the Government will fight the bondholders in court.

She said this option should go ahead even if the legal advice suggests the Government will lose their case.

The Tanaiste said there was cross-party support for her stance, although the issue would not arise for a number of years, until the liquidation process nears its end.

In emails with top Department of Finance official Ann Nolan, Central Bank Governor, Patrick  Honohan, said the "moral case" for ensuring  the surplus cash from the IBRC liquidation is returned to the taxpayer is "almost unassailable".

And he said it should engage top US debt lawyer Lee Buchheit - if the State cannot persuade an Irish lawyer to fight its case.

Speaking this evening, Deputy Burton said she is not for turning on the issue.

“As far as I’m concerned, and the Government is concerned, we will take every legal route that is possible to ensure that these monies are not paid,” she stressed.

“As Governor Honohan said the Irish Government should not be paying this money.

“However, all of this is some distance, maybe even years, into the future.”

Mr Honohan previously criticised the decision to guarantee junior bondholders in 2008.

He said in overall terms the sum involved isn’t particularly big, but is still "worth a big legal battle".

“These junior bondholders were offered a buy out by the Government,” Minister Burton added.

“And in effect the people who didn’t take the buyouts are holding out.

“I feel very strongly, so does the Government, and we express this every time it’s come up, that the we should not have to pay these junior bondholders who are holding out.

“We will use all the legal means at our disposal to resist any attempt by these hold-out junior bondholders to extract any money from the Irish Government.”

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