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Central Bank’s hopes of recovering IBRC debts hinge on legal cost ruling

 The special liquidators of IBRC believe that if the bank is beaten in a court case the legal costs awarded to its opponent will go to the top of the queue to be paid from proceeds of its winding up, even moving ahead of the Central Bank that the liquidation was set up to repay.In court papers seen by the Irish Independent, joint special liquidator Kieran Wallace of KMPG argues that the bank does not need to set aside cash to cover the potential adverse legal cost of the award that it might suffer if it loses a legal action that it has taken.Historic claims against the bank rank as unsecured creditors in the liquidation, he said.

As a result, they are unlikely to be paid.

However, Mr Wallace said any order for costs made against the bank in cases that it has pursued since the liquidation would rank as “priority claims”.

It means that in cases where the joint liquidators have authorised legal action, any resulting costs order against the bank go straight to the top of the queue for repayment, he said.

 

He was responding to a legal move by Johnny Moran, the former owner of the Holiday Inn hotel in Dublin, who is involved in a series of disputes with IBRC over the bank’s decision to put his business into receivership.

Mr Moran had demanded that the bank should be made to put up cash that would cover his legal costs, in the event it loses its legal action against him, in a move known as “security of costs”.

“I say that I cannot conceive of any circumstances in which IBRC would not be in a position to meet in full any costs award that might be made in favour of the defendant,” Mr Wallace said in his court filing.

 

He said that there is no reason for the bank to put up cash as security for costs in advance, but said IBRC is willing to retain €50m in assets until after legal action with Mr Moran.

Mr Wallace is one of two special liquidators charged with shutting down the former Anglo Irish Bank in order to pay off its debts to the Central Bank of Ireland.

The unusual nature of the liquidation, including the fact that emergency legislation was used to put the bank into liquidation, has created huge confusion, especially for anyone who is involved in legal action with the bank.

Donal O’Donovan – Irish Independent

 


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