If you believe the reporting in today’s Sunday Independent, businessman and developer Paddy McKillen is getting antsy about refinancing his IBRC loans, with a claim that the Special Liquidator of IBRC, Kieran Wallace of KPMG has turned down an offer that would see €179m of Paddy’s IBRC loans, reportedly tied to Jervis shopping centre in Dublin and property in Boston, repaid 100%.
There is no reference to the remainder of Paddy’s loans at IBRC, either his personal loans which in total have been reported to be €300-370m or his corporate loans reported to be €550m. And there is no word on the loans which secure shares on Paddy’s stake in Coroin, the company which controls the three London hotels, the Berkeley in Knightsbridge and Claridge’s and the Connaught in Mayfair. And lastly, it is not clear what a 100% repayment means. You might recall that Sean Quinn at one stage was promising 100% repayment of his billions to Anglo, but such repayment was dependent on fanciful results at Quinn Insurance over five years.
We don’t know what Paddy had in mind, and the Sindo’s reporting stretches credibility to suggest a bank would not accept 100% repayment of a loan. We also know that Paddy’s business rivals, the Barclay brothers, are closely watching Paddy’s IBRC loans secured by his stake in Coroin, and it has been reported that the Barclays are prepared to pay a premium on market values of those loans, presumably to give them a gateway to control of the hotel group. Following the publication of Judge Mac Eochaidh’s judgment last Friday in which the Judge granted the Sunday Times limited freedom to report on Paddy’s affairs, the Sunday Times has today published a story about Paddy obtaining new facilities recently to pay his legal fees. Paddy didn’t make the Sunday Times Irish 250 Rich List last Sunday which had a threshold of just €41m. So, the Barclays will be more-than-ever interested in the Paddy’s IBRC loans.
The report in the Sindo today reminds us that the Special Liquidator of IBRC is presently managing a window of time when loans can be refinanced out of IBRC by the borrowers, and when that window closes the loans will be offered to the highest bidder but at no less than an independent valuation. We saw earlier this week that Minister for Finance, Michael Noonan refused to confirm the value of loans refinanced out of IBRC since 6th February 2013 when he appointed the Special Liquidator and he also refused to confirm that refinancing had been at 100% which is a commitment previously given and which continues to be referred to by the Minister.
We also learned this week that borrowers had been contacting the Department of Finance about their loans, and Minister Noonan said that nine such written representations had been received to date. We don’t know what the Department of Finance did with those representations, but the Department prodded RTE to last week clarify that the Department did not “look into people’s bank accounts”
This is all beginning to get quite murky, and as we have shoveled €35bn into IBRC so far – €34bn up to 6th February 2013 when it was placed in special liquidation and €934m in March 2013 when two bonds were paid under the Eligible Liability Guarantee scheme, we really should know what is happening to our money. And if borrowers are making representations to Government and possibly through the pages of the old media, then shouldn’t we at least have some protection in the form of anti-lobbying rules?
This week, Minister Noonan ruled out anti-lobbying rules for IBRC, rules which already exist in NAMA and which, coincidentally are understood to form part of Paddy McKillen’s case against NAMA launched on Friday in Dublin’s High Court. So NAMA is managing €32bn of assets and is subject to rules which if broken can lead to imprisonment, on the other hand, the Special Liquidator at IBRC is managing €16bn of estimated value assets and all we have is Kieran Wallace’s word of honour. KPMG was the auditor of AIB, Irish Nationwide and Permanent TSB during the boom years, and these three institutions have cost us €30bn in bailouts. KPMG was also around for the balls-up at the Lotto draw two weeks ago.
There is nothing to suggest Kieran Wallace is not honourable, but, nor is there anything that suggests the clean-sleeved employees at NAMA aren’t. Bizarrely, Minister Noonan justifies not extending NAMA’s anti-lobbying rules to KPMG by saying there is just a short window when KPMG will have control of the assets, but the Minister refused to confirm newspaper reporting that the August 2013 deadline for transfer of unsold loans to NAMA, has slipped, and that KPMG may have control of the IBRC assets for perhaps a year.
Paddy McKillen of course was part of the Maple 10, or Anglo Golden Circle given loans by Anglo to acquire Sean Quinn’s stake. There are billions of our assets presently under offer at IBRC, and the last thing we need is for a new golden circle getting privileged access to those assets below market value.
The parliamentary questions and responses from which the information used above is derived are here:
(1) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the safeguards which exist to prevent the special liquidator at Irish Bank Resolution Corporation from being subjected to improper influence from any quarter including borrowers or Government Departments, in his duties to maximize the value of IBRC assets.
Minister for Finance, Michael Noonan: The Special Liquidators have been appointed for the purposes set out in the IBRC Act 2013 and are subject to the duties and obligations set out in that legislation. In addition the Special Liquidators are also subject to the restrictions and obligations as set out in the Special Liquidators engagement. As accountants, appointed as Special Liquidators, normal professional standards apply to all conduct.
Independent third parties are being engaged to value the loan assets of IBRC (in Special Liquidation).The appointment of independent third parties ensures that the valuation and sales process is managed without improper influence or conflict of interest.
Should a bid not be received that is equal to or in excess of the independent valuation obtained, the loan will transfer to NAMA at the independent valuation price.
(2) Deputy Pearse Doherty: To ask the Minister for Finance if it is appropriate to extend the anti-lobbying rules, which apply to the National Asset Management Agency, to the liquidation of Irish Bank Resolution Corporation..
Minister for Finance, Michael Noonan: The liquidation of IBRC is similar to any other liquidation with the exception that the Special Liquidators have been appointed by the Minister under the Irish Bank Resolution Corporation Act 2013 rather than appointed by the Courts. As such the Special Liquidators are obliged to follow normal Companies Acts priorities throughout the liquidation process and act in a manner that ensures the assets of IBRC are managed in a way which maximises the overall return for all its creditors including the State subject to the provisions of the IBRC Act.
The Special Liquidators are in the process of devising and implementing a valuation and sales process in respect of the assets of IBRC. Any assets that are not sold to third parties for a value higher than the independent valuations will be sold to NAMA at that price. Assets that are transferred to NAMA will be subject to the anti-lobbying rules contained in Section 221 of the NAMA Act 2009.
As the Special Liquidator will only be holding the assets for a short period and the sale is guided in a specified manner, the anti-lobbying provisions were not applied to it. As accountants, appointed as Special Liquidators, normal professional standards apply to all conduct.
(3) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline any representations that he or his Department has received from, or on behalf of, borrowers at the Irish Bank Resolution Corporation in special liquidation, after the announcement of the special liquidation of IBRC on 6 February 2013..
Minister for Finance, Michael Noonan: As the Deputy is aware, representations are received in a number of ways including representations through political representatives, from individuals directly, from legal representatives of clients of the bank etc. These representations are received through a number of channels including mail, e-mail and primarily by telephone contact. The overall number of written representations relating to borrowers of IBRC (in special liquidation) received since the 6th of February total 9.
As a general rule the Department does not become involved in individual cases and will refer borrowers to the bank, to the Central Bank or to the Financial Services Ombudsman etc. as appropriate and depending on the circumstances of the case. It would not be appropriate for me to comment on the content of personal representations that have been received.
(4) Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm when the window in which the Special Liquidator of Irish Bank Resolution Corporation is allowing existing borrowers to refinance their loans 100%, is to expire.
Minister for Finance, Michael Noonan: I have been informed by the Special Liquidators that the window in which Borrowers are allowed to refinance their loans 100% will remain open until such time as the loan is sold in the sales process.
(5) Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm when the Special Liquidator of Irish Bank Resolution Corporation will commence offering loans to the market for sale..
Minister for Finance, Michael Noonan: I have been advised that the Special Liquidators are unable to confirm at this point when the loans of IBRC (in Special Liquidation) will be offered to the market for sale. The loan sales process is currently being finalised.
(6) Deputy Pearse Doherty: To ask the Minister for Finance if it remains the case that the National Asset Management Agency will acquire the unsold remaining loans at Irish Bank Resolution Corporation in August 2013, or if that date has slipped; and if he will make a statement on the matter.
Minister for Finance, Michael Noonan: I have been informed that should a bid be received for a loan that is not equal to or in excess of the independent valuation received, the loan will transfer at the valuation amount to NAMA. Work in relation to the sale and transfer of loans to third parties is on-going. The Special Liquidators are unable to comment at this time as to when this work will be completed.
(7) Deputy Stephen S. Donnelly: To ask the Minister for Finance if he will provide a breakdown of the ELG payments that comprise the €933m provided under the Credit Institutions (Financial Support) Act 2008, as detailed in the March Exchequer; and if he will make a statement on the matter.
Deputy Pearse Doherty:To ask the Minister for Finance if he will provide a breakdown of the €933.775million eligible liabilities scheme payment in the March 2013 Exchequer Statement between senior unguaranteed unsecured bondholders, senior unguaranteed secured bondholders, senior guaranteed secured bondholders, junior bondholders, depositors and others.
Minister for Finance, Michael Noonan: I propose to take PQs 176 and 194 together.
Following the liquidation of IBRC on 7 February 2013, all eligible liabilities covered by the ELG Scheme are entitled to apply for repayment under the Scheme.
IBRC had two bonds which were guaranteed under the Scheme and which had ELG certificates. Both were senior unsecured bonds. During March 2013, the two ELG Scheme guaranteed bonds were repaid in full to the Bond Trustee, for distribution to bondholders. This amounted to a total of €933.775 million.
