Irish Bank final recognition ruling delayed; interim relief continued

By Jim Witters

Wilmington, Del., Nov. 6 - Irish Bank Resolution Corp.'s bid for final U.S. recognition of its foreign proceeding was not forthcoming after a day-long hearing in which the legitimacy of the Irish case under U.S. laws was called into question.

John Flynn Sr., a permanent U.S. resident who operates U.S. corporations, joined Castleway Properties, LLC and Walnut-Rittenhouse Associates, LP in opposition to final recognition of the proceedings in Ireland during a hearing in the U.S. Bankruptcy Court for the District of Delaware.

Judge Christopher S. Sontchi pushed back a ruling until he can consider the arguments and read filings from each side detailing their findings of fact and conclusions of law.

Sontchi said the filings must be entered on the court docket by 5 p.m. ET on Nov. 12 and delivered to his office early on Nov. 13.

He offered no timetable for issuing his ruling.

The judge extended provisional recognition of the proceedings in Ireland through the date he issues his ruling on final recognition. He also stayed any transactions by IBRC that involve loans made to U.S. citizens.

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

At issue is whether the special law enacted by the Irish Parliament to wind down operations of the IBRC meets the requirements for recognition under Chapter 15 of the U.S. Bankruptcy code.

Flynn, Castleway and Walnut-Rittenhouse argued that Ireland's minister of finance is the owner of the businesses involved in the wind down, is the person in ultimate control of the wind-down process and can change the course of the case without consultation with interested parties and without concern for judicial review or reversal.

IBRC attorney Van C. Durrer, II said the case meets all of the criteria outlined in Chapter 15.

The finance minister is an administrator who is overseeing the wind down and whose decisions may be challenged in Irish courts.

Flynn's attorney, Lawrence Daniel O'Neill, said there is no provision under Irish law that permits an Irish citizen to sue the finance minister, and there certainly is no provision for an American to bring such an action.

O'Neill said IBRC violated the U.S. Bankruptcy Court's stay order by selling some of Flynn's loans to a third party on Nov. 5.

Sontchi told Derr those transactions may not move forward.

Flynn has sued IBRC in New York state court, alleging 18 years of overcharging by IBRC and its predecessor, Anglo-Irish Bank. He says IBRC owes him $11 million.

U.S. recognition of the proceedings in Ireland would halt that lawsuit until the bankruptcy case ends.

Castleway and Walnut-Rittenhouse said IBRC violated their loan contracts by transferring the debt to a non-bank entity in Ireland - a special vehicle called National Asset Management Investments Ltd. - which the National Asset Management Agency established to hold its assets.

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

The NAMA controls IBRC.

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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