Pearse Doherty (Donegal South West, Sinn Fein)
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169. To ask the Minister for Finance further to a report in a Sunday newspaper on 21 April 2013 regarding the special liquidation of Irish Bank Resolution Corporation which claimed to quote a Department spokesperson telling the newspaper, if the value of the assets sold is not sufficient to compensate National Assets Management Agency for the bonds it has issued, he will be required to reimburse NAMA for the shortfall, it will hit the national accounts, surplus/shortfall, it is not accounted for off balance, if he will confirm if this is correct; if so, if he will explain the apparent inconsistency with the response given by him to Parliamentary Questions 275, 276, 277 and 278 of 16 April 2013 when he stated through the liquidation process, the proceeds from the disposal of IBRC's assets will be used to repay creditors in accordance with normal Companies Acts priorities and consequently, preferred creditors will be paid first and then debt purchased by NAMA from the Central Bank will be paid; and if he will confirm if NAMA will bear any loss on its issuance of bonds and if not, how any shortfall will be addressed [20019/13]

Michael Noonan (Limerick City, Fine Gael)
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I am not aware of any inconsistency in my response of 16 April last. The debt purchased by NAMA from the Central Bank is a claim debt secured by a floating charge over the assets of IBRC. The sales proceeds received through the sale of the Company’s assets will be used to repay the creditors of the Company subject to the normal legal priorities, as set out in the Companies Act’s. Once the costs of the liquidation have been paid payments will be made to those creditors who are classified as preferential creditors. Section 285(7) of the Companies Act, 1936 (as amended) (“the Act”) provides that preferential debts shall “have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge”.

If, after an independent valuation exercise, the value of the assets sold by the Special Liquidators is not sufficient to compensate NAMA for the amount it paid for the net IBRC debt owed to the Central Bank, then that shortfall will be compensated by the Exchequer which would impact the national accounts. It will not be possible to conclude whether the value of the assets to be sold by the Special Liquidator is sufficient to compensate NAMA until after the valuation has been concluded. If the value of the assets is greater than €12.928bn bonds issued by NAMA then the surplus will go to the liquidation for the benefit of other creditors of IBRC.