Judge throws out lenders' bid to have INBS wound up
THE drive to ensure some lenders share the losses of failed Irish banks got another boost last night.
The High Court in London threw out a legal case taken by two lenders who wanted Irish Nationwide Building Society (INBS) wound up and its debt paid in full instead of being made to share the burden of the bank failure with taxpayers.
The case was taken against INBS and French bank BNP Partibas, the trustee of the bonds.
In a comprehensive victory for INBS the judge, Justice George Mann, struck out the claim. He said the effort to have the society wound up was "bound to fail at trial".
He gave no leave to appeal the decision. It means lenders will have to seek separate court approval if they want to appeal his decision.
The case was taken by Trimast Holding SARL and Satinland Finance SARL. Between them they hold 25pc of the €250m of subordinated bonds issued by the building society.
The pair tried to claim that INBS should be considered to be effectively in default after Finance Minister Brian Lenihan said in October that he expected subordinated debt holders to make a significant contribution towards meeting the costs of bank failures.
They demanded that BNP Partibas, as trustee of the bonds, should seek to have INBS wound up.
The judge struck out the case and awarded costs to INBS and BNP Paribas.
The case was taken in London because the bonds had been issued under English law, which is common for bonds from all across Europe.
The case was heard on Thursday and Friday last with the judgement handed down last night.
The result was the third day in a row of good news for the "burden sharing" strategy after lenders to Anglo voted to accept losses. Following the Anglo result, some creditors have applied for default insurance to be paid out.