Irish Bank Resolution granted provisional recognition of foreign case

By Jim Witters

Wilmington, Del., Oct. 8 - Irish Bank Resolution Corp.'s foreign representatives received provisional U.S. recognition of their pending liquidation in Ireland and a temporary halt of proceedings in a New York litigation.

The foreign representatives met their legal obligations under Chapter 15 of the U.S. Bankruptcy code in demonstrating that proceeding with the New York case would cause irreparable harm to the estate, Judge Christopher S. Sontchi ruled during an Oct. 8 hearing in the U.S. Bankruptcy Court for the District of Delaware.

John Flynn Sr. filed suit against IBRC in June in the U.S. District Court for the Southern District of New York, alleging that IBRC and its predecessor, Anglo-Irish Bank, engaged in 15 years of fraudulent activity that harmed their clients.

He claims IBRC owes him $11 million.

Flynn objected to U.S. recognition of the proceedings in Ireland and to the litigation stay, saying delays in moving the New York case forward could result in the destruction of records when IBRC closes its doors by the end of the year, as ordered by the courts in Ireland.

Judge Sontchi ordered that IBRC maintain all records and U.S. assets during the bankruptcy case.

Meanwhile, Allan S. Brilliant, representing Burlington Alpha LLC and Burlington Beta LLC, argued that IBRC may not be eligible for Chapter 15 protections if the bank made loans in the United States. His clients are seeking documents from IBRC to make that determination.

Brilliant also questioned whether the proceedings in Ireland meet the criteria for U.S. recognition under Chapter 15, because the IBRC is liquidating under a law enacted in February specifically to handle the IBRC assets.

"Does this narrow Irish statute meet the elements of Chapter 15? We don't think it does," Brilliant said.

In granting the provisional recognition, Sontchi said that he was making no determination on Brilliant's argument.

"We are a long way from a judgment in this case, and there will be a lot of litigation between then and now," Sontchi said.

Anglo Irish Bank was nationalized in 2009, and IBRC is the vehicle established to wind down operations.

The judge did not schedule a hearing for final approval of recognition of the foreign case.

Irish Bank Resolution, a Dublin-based successor to Anglo Irish Bank, filed for bankruptcy on Sept. 17. The Chapter 15 case number is 13-12159.

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