- The success of the loan sales processes has removed any residual risk of further calls on the Exchequer.
- The liquidation to date has generated €16.5bn of cash inflows allowing a payment of €14.7bn to IBRC’s creditors and costs to date resulting in a cash balance on hand of c. €1.85bn which will be available for distribution to creditors.
- The Special Liquidators could be in a position to make an interim distribution to unsecured creditors before YE2015.
The Minister for Finance, Mr Michael Noonan T.D. today (13 March 2015) received and published a Progress Update Report on the special liquidation of IBRC from the Special Liquidators, Mr Kieran Wallace and Mr Eamonn Richardson. Commenting on the success of the liquidation to date the Minister stated:
“The sheer scale and complexity of the liquidation of IBRC which is unprecedented in Ireland, is evident in the report. To 6 February 2015, the liquidation had generated €16.5bn of cash inflows. Much of this was generated through the €21.7bn of par value assets that have been prepared, brought to the market and sold. This has allowed for the payment of €14.7bn to IBRC’s creditors and costs to date.
In March 2014 I announced that the debt acquired by NAMA as part of the Promissory Note transaction was now expected to be repaid in full following the successful conclusion of the majority of assets in IBRC. I can confirm that this debt was fully repaid in October 2014. The success of the loan sales processes devised by the Special Liquidators negated the need to transfer any assets to NAMA as part of this process and removes any residual risk of further calls on the Exchequer.
The success of the liquidation to date has resulted in a cash balance on hand of c. €1.85bn which will be available for distribution to the remaining creditors. The Special Liquidators inform me that they could be in a position to make an interim distribution to unsecured creditors in the last quarter of this year. Creditors in the UK and Ireland, including various Local Authorities and Credit Unions, have until the 31st of March to submit their claims. This is a great result considering where we started from in February 2013. The success of the IBRC loan sales processes illustrates the strong investor confidence in the Irish economy and its future prospects.
The Report provides details on the cost of the liquidation and the loan sales processes to the end of year-end 2014. The costs should be considered in the context of the alternative arrangement which was to continue to wind-down IBRC’s operations until 2020. Had this course of action been taken it was anticipated, at that time, that the costs would have been in the region of €1.1bn.
I would like to commend the Special Liquidators and the staff of IBRC and the other advisers for the hard work that was done over the past two years and I would also like to congratulate them on the successful result of their efforts to date.
I gave a clear message to the Special Liquidators that the best outcome must be delivered to creditors, which included the Irish taxpayer, and that the task should be completed within a strict deadline to minimise costs. This has been delivered. I am satisfied with the financial outcome of the liquidation to date which has far exceeded our expectations and has not resulted in any further cost to the Irish taxpayer.”
13th March 2015
Ends
http://www.finance.gov.ie/publications/ibrc-progress-update-report
Notes to editors
Purpose of publishing this report
- In the normal course of events the Special Liquidators had a statutory reporting requirement to report to the Companies Registration Office after the second anniversary of their appointment which was in February 2015. It was decided, to coincide with this statutory requirement, to produce an updated report on the progress of the special liquidation of IBRC to date.
- An initial progress update report was published last June and this updated report provides a further update on the status of the Special Liquidation. The report is being to the Oireachtas Committee on Finance, Public Expenditure and Reform for its consideration.
On-going creditor adjudication process
- The completion of the creditor adjudication process is one of a number of key tasks remaining for the Special Liquidators, who have published advertisements and written to known creditors in order to finalise the creditor claims in the liquidation.
- Creditors in the UK and Ireland (including various Local Authorities and Credit Unions) have until 31 March 2015 to submit their claims and those creditors in the US have until 31 May 2015. The ultimate level of dividend paid, if any, to each creditor cannot be known until such time as all loan assets are sold, the total level of adjudicated creditors is finalised and the other contingent creditor claims which may crystallise, including those from litigation, are known.
Benefits of the Promissory note transaction of February 2013
The special liquidation of IBRC was a core element of the Promissory Note transaction. The benefits of this transaction were multiple and included:
- The short term promissory notes were replaced by long term Government Bonds with an average maturity of 34 to 35 years.
- A reduction in the State’s General Government deficit of approximately €1 billion (0.6% of GDP) per annum over the coming years, which brings us closer to attaining our 3% deficit target by 2015.
- A significant element of the interest payments on the Government bonds, will ultimately be returned to the Exchequer in the form of Central Bank dividends.
- The State will be borrowing €20 billion less cash over the next 10 years due to the cash flow benefits.
- Anglo Irish Bank and Irish Nationwide are finally consigned to history.
All of these benefits contributed towards Ireland’s exit from the EU – IMF Programme of Assistance and our current record low borrowing costs.
In addition, the now successful outcome of the special liquidation has drawn a line once and for all under the cost to the Irish taxpayer of Anglo Irish Bank and has been a contributory factor in Ireland’s sovereign rating upgrades.
A significant risk to the State and taxpayer has been removed. The benefit of this can be seen in the significant reduction in the States borrowing costs, our 10 year bonds opened at a yield of 0.76% this morning. The success of the liquidation has brought many new investors to Ireland and this has had knock on benefits across the economy.
