Business Irish

Saturday 18 November 2017

Anglo on hook for €1.6bn as appeal is dropped

Donal O'Donovan

Donal O'Donovan

Liquidators of the former Anglo Irish Bank are set to withdraw a legal appeal against a ruling in the UK courts that found the bank's 2010 deal to burn bondholders owed €1.6bn was unlawful, the Irish Independent has learnt.

A decision to drop the appeal will leave the bust bank potentially on the hook for the full €1.6bn owed to so-called "subordinated" bondholders.

That debt was supposed to have been wiped out through so-called "burden sharing" with bondholders back in 2010, when the bank was in state ownership.

Under that scheme, Anglo's so-called junior bondholders were offered 20 cent in the euro to give up their claims against the bank, which was later renamed Irish Bank Resolution Corp (IBRC). Bondholders who refused got just 0.01 cent per €1,000 that they were owed.

That was done by including a condition in the offer that meant investors who accepted the 20 cent in the euro deal also voted to force the bigger loss on those who refused the offer.


It was that this "coercive" measure that Justice Briggs at the High Court in London found to be unlawful last July following a case taken against Anglo taken by German bond investor Assenagon Asset Management.

Special liquidators Kieran Wallace and Eamonn Richardson of KPMG last night declined to comment on the status of appeal.

However, legal advisers to Assenagon said the liquidators have indicated that they do not intend to proceed with an appeal.

The specialist debt-market news service Debtwire reported that the Irish bank decided to abandon its fight against the judgment because liquidators calculate that continuing with the case is not in the best interests of creditors.

Formal withdrawal must be made by March 11.

The judgment means the original bonds are reinstated – not just for Assenagon and minority of investors that refused the IBRC offer but potentially for the entire class of investors affected.

Reinstating the debt is no guarantee that the money will be paid, however.

IBRC/Anglo is now in liquidation.

The so-called "junior bondholders" are now effectively unsecured creditors of the former bank.

What, if anything, they could be repaid will depend on the cash left when the bank's assets are sold off and its secured debts are repaid.

That process will take at least six months.

Irish Independent

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