THE ALTERNATIVE to the sale of Quinn Insurance Ltd (QIL) would be liquidation, massive job losses and “further catastrophic losses to the local community”, the president of the High Court said yesterday when giving his reasons for approving the sale.
Mr Justice Nicholas Kearns said the foundations and structure of the proposed sale to a joint venture of US insurer Liberty Mutual and Anglo Irish Bank appeared “sound and well thought out” and he was satisfied there was no evidence of any danger presented by the transaction to the position of the company’s 1,600 employees or its policyholders.
He accepted evidence from the chairman of the QIL Employee Representative Board that the vast majority of employees wanted the sale to proceed. He was also “strongly influenced” by the fact that the Minister for Finance and his departmental officials, having been given all the relevant information, had given their assent and approval to the transfer.
While objections had been made to the sale proposals providing for a €200 million payment to banks and bondholders to release guarantees that affected QIL, he was satisfied there was evidence if those guarantees were called in by the banks and bondholders, they had the potential to render the guarantor companies in the Quinn group insolvent.
The proposed sale would have the effect of preserving solvency of all those subsidiaries and releasing assets to QIL, he said.
While he was keenly aware the proposed transfer “might not be the most perfect or ideal solution to the enormous difficulties which befell this company”, the proposals represented “a floating ship in turbulent seas where shipwreck and abandonment appeared to be the only alternatives for QIL, its employees and policyholders”.
These factors, plus the Central Bank’s outline approval, the European Commission’s approval, the fact the regulatory body for solicitors in England and Wales had withdrawn objection, and his own findings the transfer would safeguard policyholders, had led to his approving the sale, the judge said.
There was also no evidence to support allegations the estimates provided for claims reserves were inflated, the judge said. Even if the reserves were overstated, the sale documents included provision for a review of claims provisions after closing of the sale that would enable any over-estimation by QIL to be recouped “within certain limits”.
The judge was giving his judgment outlining reasons for his decision last week approving the sale.
That approval means €738 million of public money will be paid out of the State’s Insurance Compensation Fund to the insurer, including an immediate payment of €320 million to facilitate the sale, with the remainder later, subject to applications to the court.
The joint administrators of Quinn had told the court the alternative to the proposed sale was liquidation of the insurer with a deficit of some €1.3 billion and 1,600 job losses.
The Quinn Group Ltd also supported the proposed sale.
