IBRC liquidation sparks payment fears for lawyers and accountants
LAW firms, accountancy practices and receivers who worked for IBRC have been told to provide detailed claims for money they are owed by the bank by April 30, but liquidators warn they have no power to pay the bills.
Letters were circulated to firms that worked for Irish Bank Resolution Corporation (IBRC) on February 8, a day after Finance Minister Michael Noonan appointed Eamon Richardson and Kieran Wallace of KPMG as special liquidators.
The letter, seen by the Irish Independent, tells suppliers that liquidators intend to continue trading with the bank's former providers, but states that only bills for work done after the appointment of liquidators are to be paid. Those submitting bills for work already done are likely to be classed as unsecured creditors.
All kinds of suppliers are affected, but IBRC is unusual because legal and other professional services were its biggest cost, higher even than its annual wage bill.
Before it went into liquidation, the state-owned former Anglo Irish Bank was a major source of work for the big Dublin professional services firms.
The last set of full-year accounts for IBRC suggest it spent around €108m on professional services, classed as "other administrative costs" in 2011.
That was more than the bank's wage bill, and was paid for advice on everything from valuing property loans to legal actions against the family of bankrupt tycoon Sean Quinn.
Law firm Arthur Cox has been acting for the bank in its actions against the Quinns. McCann Fitzgerald is the bank's "house lawyer" and has been advising in the case against former auditors Ernst & Young. The bank's more recent auditor, Deloitte, earned €1.5m from IBRC in 2011.
The collective bill still owed for work done by professional firms is reckoned to run into millions. However, claims that a single law firm is owed €8m are "grossly exaggerated".
Fees to lawyers and other professionals are normally classed as unsecured creditors in a liquidation.
The legislation rushed through the Dail on February 6 created a new type of "special liquidation" to shut down IBRC, and it remains unclear how it will work in practice.
Firms making claims have been told to say by the end of this month if they believe they have any additional "lien" of security that could increase their rights to a share of the bank's assets.
That could come into play in cases such as receiverships and liquidations where in legal terms firms act on behalf of debtors to recover assets, not for the bank that appoints them.
One partner in a Dublin law firm said he expects the confusion over the scope of the new legislation to prompt a flood of legal cases, including from creditors uncertain about their status in the liquidation.