Michael McGrath (Cork South Central, Fianna Fail)
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69. To ask the Minister for Finance if he is categorically ruling out the possibility of payments being made to junior bondholders in Irish Bank Resolution Corporation as a result of the special liquidation process; if he is prepared to issue a direction order that they would not be paid; and if he will make a statement on the matter. [47619/14]

Michael McGrath (Cork South Central, Fianna Fail)
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73. To ask the Minister for Finance the status in the ranking of preferred creditors of the payment he made the bank guarantee to senior bondholders of IBRC following its liquidation in 2013; and if he will make a statement on the matter. [47682/14]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 69 and 73 together.

The Special Liquidators continue to implement the orderly and efficient wind down of Irish Bank Resolution Corporation Limited (in Special Liquidation) in accordance with the provisions of the IBRC Act and the instructions issued by me under the IBRC Act .

In April 2014, the Special Liquidators announced that the loan sales process had concluded. The sales process of the IBRC loan assets, including their segmentation to meet demand from international buyers, delivered a very positive result with over 90% of the loan assets (with a par value of €21.7bn) sold.

Following instructions issued by me, NAMA were no longer obliged to purchase the unsold IBRC assets at their independent valuation as previously envisaged, as it became clear that the expected proceeds to be raised from the sale of the IBRC loan assets would be sufficient to fully repay the IBRC debt to NAMA.

The Special Liquidators have therefore devised a further sales process in respect of the unsold loan assets so as to maximise the return to all remaining creditors of IBRC, including the State. This sales process is currently underway and the Special Liquidators are unable to quantify at this stage the total sales proceeds that will be achieved from this process.

As the Special Liquidators maximise the proceeds of the liquidation, it is important that they have a comprehensive view of the creditors who ultimately may be entitled to these proceeds. To this end, the Special Liquidators have published advertisements and written to those known creditors in order to finalise their claims in the liquidation. Creditors in the UK and Ireland have until 31 March 2015 to submit their claims and those creditors in the US have until 31 May 2015.  

Once all claims have been submitted, they will be reviewed in detail and adjudicated on by the Special Liquidators. In order to finalise this process, further information may be sought from some creditors in order to validate their claim. Should the junior bondholders submit a claim and it is found to be valid by the Special Liquidators, then they will be legally entitled to a payment from the proceeds of the liquidation provided there are sufficient funds available for distribution in line with their position in the hierarchy of creditor claims .

The Special Liquidators are unable to comment at this stage both on the level of proceeds that will ultimately be generated from the liquidation and on the level of valid creditor claims that will ultimately be received in respect of the liquidation. It is balance between the proceeds generated and level of valid claims that will ultimately determine the dividend to which each creditor may be entitled. The ultimate level of dividend paid to each creditor cannot be known until such time as the sales processes are complete, the total level of adjudicated creditors is finalised and the other contingent creditor claims which may crystallise, including those from litigation, are known.

It is understood that for the payment of proceeds from the liquidation, unsecured creditors will rank in priority to the holders of subordinated debt. The priority for the distribution of assets under the Companies Acts is generally:

i. costs and expenses of the ongoing liquidation;

ii. preferential creditors, including certain taxes and employee and pension claims arising prior to the date of liquidation (these claims are certain to be paid in full)

iii. amounts owing to NAMA under the Facility Deed acquired from the Central Bank which were secured by a floating charge over the bank s assets (this debt is now fully repaid and so the floating charge is now released)

iv. unsecured creditors, including:

- Debts owing to the Minister/NTMA under ELG and to DGS

- Unguaranteed debt/depositors (including holders of tracker bonds etc.)

- Unknown, including:

- Local authority development bonds

- Suppliers / other normal unsecured creditors

- Employees that are not preferential creditors

- Contingent creditors and other potential costs principally relating to litigation etc.

v. subordinated creditors

vi. Members of the company - the Minister currently holds 100% of all shares and preference shares in the company.