The State is set to recoup a large proportion of the €1.1 billion it is owed from IBRC before the end of the year in what would be a significant boost to exchequer finances.
The unexpectedly high interest in buying the assets of the former Anglo Irish Bank and Irish Nationwide Building Society also means the exchequer is likely to get a further payback when the liquidation and associated court actions are finished, though the probable scale of this is not yet clear.
There will also now be enough cash from the liquidation sale to pay the €270 million owed to Anglo’s former subordinated bondholders, who resisted an attempt to buy out their bonds and are due to be paid after the main group of unsecured creditors.
This is likely to spark significant political controversy, though it is possible that payment to these bondholders may not happen before the next general election, as the liquidators hold back cash to cover possible legal costs.
The massive liquidation of IBRC will be largely completed by the summer, though litigation will delay the final payout to creditors for a considerable period after that.
However, in an update on Friday, joint liquidators Kieran Wallace and Eamonn Richardson of KPMG said an interim payout was likely to unsecured creditors before the end of 2015.
The liquidators already have cash resources of €1.85 billion in place, following the payment of all secured creditors.
Payout unclear
The liquidators gave no indication of the scale of this payout, though normally such interim payments would amount to a significant portion of the money owed.
It thus looks likely that the State will be paid at least €500 million to €600 million by the end of the year and possibly closer to the full €1.1 billion owed.
In any event, all this money is certain to be repaid in time, and other unsecured creditors, such as credit unions, local authorities and trade creditors, will also get all their money back.
The former Anglo junior bondholders are next in line after the main body of unsecured creditors are fully repaid. There are no signs as yet that the Government will try to stop this repayment.
The Anglo Irish Bank and Irish Nationwide bailouts cost the state almost €35 billion. The result of the liquidation means that this bill will not rise any further. If, as now looks likely, some funds are left after all the creditors are paid, then the State will get the surplus.
How much is left will depend on how much the liquidators raise from the sell-off of the remaining €3.5 billion in assets.
Some of these are linked to loans to businessman Sean Quinn, who along with his family is locked in legal actions with the bank. Finalising these proceedings is now a key issue in finally wrapping up the liquidation process.
Pay down debt
Current Government policy is to use the proceeds from bank sell-offs to pay down Government debt, though Ministers would also like to up State investment.
The injection from IBRC and the Government’s large cash pile will leave the Government with significant funds available, but EU budget rules will limit its room for manoeuvre in terms of spending more in the next budget.
The European Commission wants to see high-debt countries such as Ireland pay down debt from once-off gains, though Minister for Finance Michael Noonan has indicated he will seek flexibility in the way the rules are interpreted.
The IBRC liquidators have so far taken in €16.5 billion in cash, the bulk of which was used to repay special Government bonds issued when the promissory note, used to fund the Anglo and INBS bailouts, was ended and IBRC liquidated in February 2013.
