Decision on paying Anglo junior bondholders may be delayed

A decision on whether junior bondholders in the former Anglo Irish Bank are to be repaid any money following the IBRC liquidation now looks likely to be delayed beyond the term of the current Government.

While IBRC creditors, including the junior bondholders, have to lodge their claims with the IBRC liquidator by next spring, the liquidators have said it will be “some time” after that before a decision is made on what payments they are due.

A political row has blown up over the possibility that junior Anglo bondholders, who have investments with a face value of €280 million, could be repaid following the IBRC liquidation.

Property market

This possibility emerged because the liquidation of IBRC has raised more cash than expected due to the buoyant commercial property market.

All IBRC’s preferred creditors will be paid, and some money will be left for unsecured creditors, though it is not clear how much.

First in line for any payout is the State, owed a total of €1.2 billion, the bulk of it due to having to repay remaining depositors when the IBRC was liquidated.

A group of other unsecured creditors, including trade creditors and credit unions who bought Anglo investments, will also share in any initial payout. If any cash was to be left after these unsecured creditors were paid in full, it would go to paying the junior bondholders.

Taoiseach Enda Kenny has said that he does not see “any circumstances” in which the junior bondholders would be repaid.

In a comment, the special liquidators, Kieran Wallace and Eamonn Richardson of KPMG, said the UK and Irish creditors had to lodge their claims by next March and US creditors by next May. They said it would be some time after this before any decision was made on what payments were due to different creditors.

It would take time to verify the various claims, the liquidators said, while the final tranche of assets had also still to be sold.

IBRC is engaged in ongoing litigation, notably with the Quinn family from Co Cavan, and the liquidators must be satisfied that adequate provision is made for this. It is believed this could delay any final decision for a lengthy period.

While this may avoid a tricky decision for this Government, it also means the State will have to wait before getting back some or all of the €1.2 billion it is owed.