The government can avoid paying junior bondholders at IBRC up to €280m by issuing a Direction Order to the Special Liquidator instructing that such payments not be made, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “Michael Noonan and other government Ministers have left open the possibility of junior bondholders being paid up to €280m as a result of the liquidation of IBRC. In contrast, Tánaiste Joan Burton has said she would not stand over such a payment. The government needs to have a single message on this issue – that under no circumstances will the remaining subordinated bondholders at IBRC be repaid.
“In total, about €15bn of losses have been imposed on junior bondholders as a result of the banking crisis – €10bn by the previous government and €5bn by the current one. The IBRC Act 2013, which provides for the Special Liquidation of the IBRC, gives the Minister for Finance sweeping powers over the Special Liquidation of IBRC. It should be remembered that the Liquidation of IBRC is like no other and is governed by special legislation which was rushed through the Oireachtas last year. In particular, Section 9(2) states “If the Minister is of the opinion that it is necessary for the achievement of any of the purposes of this Act to do so, he or she may give a direction to a special liquidator to take or to refrain from taking any action in connection with the winding up of IBRC”, thereby giving him the power to prevent these pay-outs.
“It is entirely within the gift of the government to categorically rule out payments being made to the remaining subordinated bondholders in IBRC and this is precisely what the government should do”.