High Court clears way for €1.3bn sale of IL&P’s life assurance business
THE High Court has cleared the way for the €1.3bn sale of Irish Life and Permanent's life assurance business, the Irish Life Group, to the Minister for Finance.
Mr Justice Michael Peart today dismissed a challenge by some Irish Life shareholders aimed at quashing a direction order for the purchase of Irish Life granted by the High Court last March to the Minister for Finance Michael Noonan under Section 9 of the Credit Institutions (Stabilisation) Act 2010.
In a lengthy and detailed judgment Mr Justice Peart found that the shareholders lacked the legal standing to challenge the direction order as they were shareholders of the parent company IL&PGH and not IL&P itself.
The Government owns more than 99.8 per cent of Irish Life & Permanent Group Holdings (IL&PGH) after injecting €2.7bn into the group in July last year, resulting in the shareholder's equity in IL&PGH being diluted from 100pc to 0.2pc.
Lawyers for the Minister argued the sale is part of the recapitalisation of IL&P as required by the Central Bank and the `troika' of the EU Commission, the International Monetary Fund and the European Central Bank.
The Minister also claimed there is an urgency to the matter as the recapitalisation must be completed by the end of June or the bank could face sanctions.
IL&P, a notice party to the action, also opposed the shareholders the proceedings.
The action has been brought by a number of shareholders of IL&P's holding company - Irish Life and Permanent Group Holdings plc.
They are Gerard Dowling, Padraig McManus, Piotr Skoczylas and Mr Skoczylas's company, Maltese-based Scotchstonecapital Fund Limited, J Frank Keohane, Georg Haug, John Paul McGann and Tibor Neugebauer.
The shareholders argued the direction order, made under Section 7(2) of the 2010 Act, is unreasonable and is invalidated by errors of law.
They claim the direction order illegally forces ILP to sell a very valuable asset at undue expense of IL&PGH shareholders and for the benefit of the Minister.
The order was instigated without adequate consultation and proper observation of fair procedures, they claimed.
They claimed the sale undervalued the "crown jewels" of Irish Life.
Following the ruling Mr Skoczylas said that he intends to appeal the judgment to the Supreme Court.
The Minister denied all the claims and argues no grounds have been identified to justify the direction orders being set aside.
He claimed the proposed sale will result in the complete separation of IL&P's life assurance and banking businesses, will benefit IL&P by €1.3bn and is in the best interests of the State, the company and shareholders.
If IL&P is not recapitalised by the end of June it faces sanctions, including the possible revocation by the Financial Regulator of its licence to operate as a credit institution, they claimed.
That could put 1,800 jobs at risk and result in the calling in of the government guarantee of €8bn bonds issued by I&LP, the Minister also claimed.