European Court of Justice hears evidence in €4bn IL&P recap case
A LONG-AWAITED hearing by the European Court of Justice related to the government's €4bn recapitalisation of Irish Life & Permanent got underway yesterday in Luxembourg.
A group of shareholders, including a former non-executive director of the group, Piotr Skoczylas, sought to prevent the 2011 recapitalisation, arguing that the government did not have the power under emergency banking laws to freeze out existing shareholders from the plan.
Mr Skoczylas is the managing director of Malta-based Scotchstone Capital. He was added in 2011 to a High Court action taken by other IL&P shareholders against Finance Minister Michael Noonan, in an effort to reverse the first, €2.7bn phase of a government recapitalisation of the lender that summer. In 2012, Irish Life was sold to the State for €1.3bn, completing the €4bn recapitalisation. Irish Life was sold to Canada's Great-West Lifeco in 2013.
The initial 2011 stage of the recapitalisation under the Credit Institutions Stabilisation Act went ahead despite shareholders having voted against it. It resulted in the State taking a 99pc stake in the bank.
Mr Skoczylas had argued that prior to the recapitalisation that existing shareholders should not have seen their stake reduced to less than 44pc as a result of the government pumping cash into it.
But the Finance Minister has said that decision to recapitalise IL&P was made to fulfil the Government's legal obligations, and that failure to recapitalise would probably have led to the collapse of the bank.
In 2014, the High Court judge hearing the case referred it to the European Court of Justice. Justice Iseult O'Malley said the High Court was not able to definitively say whether or not the ECJ would confirm the law used under the Credit Institutions Act to recapitlise IL&P, now known as Permanent TSB.
The referral was heard by the European Court of Justice yesterday, but it could be weeks, or even months before a decision is made public. Mr Skoczylas did not respond to numerous attempts made to contact him yesterday.
The European Court of Justice (ECJ) considered whether it was legal for an order to be made under the Credit Institutions Act to increase a company's capital without the consent of a general meeting, and allotting new shares without offering them on a pre-emptive basis to existing shareholders. The ECJ was asked to determine if such moves were precluded under a relevant company law directive. The parties to the main proceedings are listed as Gerard Dowling, Padraig McManus, Mr Skoczylas, and Scotchstone Capital.
Meanwhile yesterday, Great West Lifeco said Irish Life CEO Bill Kyle is to retire. He will be succeeded by David Harney.