The settlement agreement between the Quinn offspring and Irish Bank Resolution Corporation (IBRC) is a landmark moment in the history of the state-owned bad bank, formed from the mortal remains of Anglo Irish Bank and Irish Nationwide Building Society. It is also, potentially, one of the last significant actions the bank will take.
Until yesterday, IBRC's special liquidators – Kieran Wallace and Eamon Richardson – had been in charge of an entity which largely was focused on litigation. Two Quinn-related cases loomed large: that taken by the Quinn children against IBRC, and the case the liquidators were pursuing against Quinn family members and group companies alleging that €455 million worth of assets had been put beyond their reach.
Yesterday’s settlement has – notionally – drawn a line under the two. It has also handed the liquidators a big stick when it comes to securing the co-operation of the Quinn children, in the shape of a judgment against each of them for €88 million. This will be stayed as long as they take steps to help secure the return of valuable assets in their international property group. Now, the Quinns and IBRC, for so long antagonists, must notionally work together to maximise the value to the State-owned bank.
A key question is now what kind of value can be extracted from these assets. IBRC spent years chasing down a paper trail of shell companies and convoluted transactions across Russia, Dubai, Ukraine, India and elsewhere, and has now secured almost all the major assets. Last weekend the Sunday Times reported that IBRC had secured control of the Q City skyscraper in Hyderabad, India. This was reportedly among the last substantial assets being chased by the bank. If this is the case, attention will now turn to selling off these buildings. On the block is an 888-bedroom hotel in Prague, four buildings in Ukraine and Russia, one in the UK, one in India, and two hotels and four pubs in Ireland. Market sources estimated a total of €600 million could be raised in the sell-off.
Rent payments
It will also be interesting to see what happens in the wake of millions being extracted from some companies in what the bank alleged were “bogus transactions”. There is also the matter of tens of millions of euro in rent payments that would have accrued to those controlling the property empire during the years in which IBRC was trying to secure it. Finally, the bank has spent millions on fees in furtherance of this goal. Getting some of these sums back may also be a key goal.
If the Quinn saga comes to anything resembling an orderly conclusion – and in this case, there is always the potential for the entente between the parties to disintegrate – then it should speed up the endgame for IBRC. This could represent a glittering political prize for a government that would be eager to trumpet the burial of the bad bank, especially as a general election looms. But while the conclusion of the Quinn actions removes the biggest blockage to achieving this, the way is not yet totally clear.
There are still 130-odd cases on IBRC's books, 111 of which it is defending. These include cases they have taken against Tom Browne, the former Anglo banker, and former INBS chief executive Michael Fingleton, as well as Anglo's former auditors, EY. Property developer Paddy McKillen is also seeking leave in Delaware to sue the bank in that state. It must dispose of assets and hope that no new material litigation is taken against it.
There is also the overhanging issue of the IBRC commission – the judge-led inquiry into all transactions which led to a capital loss of €10 million or more for the bank. That inquiry has had a difficult life so far, needing multiple time extensions and redrawn supporting legislation. It is also potentially costly, with a final price tag of €30 million mooted. The liquidators have sent 300,000 pages of documents to Judge Brian Cregan and his team, while costs of liquidation attributable to the commission are north of €5 million. Political tolerance for this costly, sprawling and time-consuming exercise may prove finite, however.
Then there is the question of what the State may still recoup from the bank. As an unsecured creditor with a claim of €1.12 billion against the bank, the guidance is still that between 75 per cent and 100 per cent of this will be paid. Hundreds of millions has already been given over. However, this is small money compared with the €29.3 billion pumped into the bank by the State. Before any of that is repaid, several hundred million must be paid in liquidation fees (which could top €300 million), as well as to holdout junior bondholders and the holders of Anglo preference shares.
The final demise of IBRC has been brought closer by the settlement. Whether the bank finally gets a clean and quick death remains to be seen.
