THE DÁIL has approved emergency legislation to immediately liquidate the Irish Bank Resolution Corporation, the combined former Anglo Irish Bank and Irish Nationwide, with immediate effect.
The approval came after four hours of debate in a dramatic late-night emergency sitting, called by the government after it openly feared for the security of IBRC’s €12 billion in assets.
Those fears came after Reuters and Bloomberg reported that Ireland’s plans to scrap the IBRC promissory notes, and replace them with a long-term government bond, would involve the liquidation of the former Anglo.
Being unable to deny these reports, the government appointed interim liquidators to the bank at the close of business yesterday, and stood down the board, ahead of tabling the IBRC Resolution Bill which would appoint a special liquidator as soon as it is passed.
In an act unprecedented in recent history, President Michael D Higgins – who is this week visiting Italy – interrupted his trip to return home so that he would be available to consider any legislation presented for his signature.
The legislation – which finance minister Michael Noonan said had been drafted several months ago, but which was still only distributed to opposition TDs just half an hour before the Dáil discussed it – was passed by TDs shortly before 3am, by 113 votes to 35.
If passed by the Seanad and signed into law – with a Seanad vote due at about 5am – the legislation would see the special liquidator proceed to sell off all of IBRC’s assets and liabilities – with the bulk going to NAMA, which will act as a kind of purchaser ‘of last resort’ if no other parties wish to buy each asset.
It would also immediately lay off IBRC’s workforce of approximately 800 – though Noonan said he understood that most of these staff would be immediately rehired either by the liquidators, or by NAMA when it takes on IBRC’s assets.
Noonan said he regretted that this was the case, but conceded that it was necessary that the legislation be introduced overnight so that there could be no attempt by IBRC’s creditors to try and stop the process in the courts in the morning.
Other features of the legislation include an immediate freeze on any legal action involving IBRC, with court approval required before any new proceedings can be brought against the bank. Any injunction against the liquidator can only be granted in the public interest.
The intention of the bill is that the promissory notes – which currently require an annual repayment of €3.06 billion, due at the end of March – will be replaced with NAMA-issued bonds, which are covered by a government guarantee.
This will have the effect of removing the annual repayments, but also incorporating IBRC’s former liabilities into NAMA and therefore bringing them fully within the State. Because the cash will be owed to the Central Bank – and therefore to the ECB – this cannot be written down.
ECB approval for the scheme could come later today when its governing board meets in Frankfurt. A preliminary agreement had originally been expected last night, but was put on ice when the bank was reluctant to commit to the idea immediately – a delay which originally called off the late-night Oireachtas sittings.
It quickly emerged, however, that the outstanding question marks about the future of IBRC left the government with no option but to kill the institution – and prompting the late-night parliamentary business to pass the laws necessary to do so.
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