Irish Bank Resolution granted two-week stay amid recognition battle

By Jim Witters

Wilmington, Del., Sept. 20 - Irish Bank Resolution Corp.'s foreign representatives received a temporary halt to other litigation until a bankruptcy judge can determine whether to grant provisional U.S. recognition to a case in Ireland.

During a Sept. 20 hearing in the U.S. Bankruptcy Court for the District of Delaware, judge Christopher S. Sontchi granted IBRC a stay of legal proceedings in other jurisdictions until a full hearing can be conducted on the foreign representatives' request for a 60-day provisional recognition.

A hearing on full recognition of the foreign proceeding will be delayed until the objecting parties complete their discovery process and decide whether to file a "fuller" objection, attorneys said.

Sontchi said he was frustrated that IBRC failed to produce two witnesses for cross examination by parties objecting to the U.S. recognition of the foreign proceedings.

The IBRC foreign representatives sought to have the witnesses' declarations entered into evidence.

But attorneys for the objecting parties said the declarations were inadmissible because the witnesses were not in the courtroom and could not be cross examined.

The declarations "are hearsay and contain misleading and inaccurate" statements, said Dan O'Neill, whose client has sued IBRC.

The witnesses remained in Ireland and did not participate in the hearing via teleconference.

Frederick Rosner and O'Neill represent John Flynn Sr., who 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.

Rosner said Flynn objects 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.

Sontchi included in his temporary order a provision to preserve all records.

Doron A. Henkin, representing Castleway Properties, LLC and Walnut-Rittenhouse Associates, LP said the case in Ireland is not a true bankruptcy and "is being run by and for the Ministry of Finance."

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

Van C. Durrer II, attorney for IBRC foreign representatives Kieran Wallace and Eamonn Richardson, said IBRC is "bleeding from a thousand cuts," as borrowers and creditors alike file claims in Ireland and lawsuits in other countries.

The stay of litigation during the U.S. bankruptcy case would preserve the estate's assets because no money would be spent producing the records that Flynn and other litigants are seeking, Durrer said.

Allan S. Brilliant, representing Burlington Alpha LLC and Burlington Beta LLC, said he needs time to received and examine documents from IBRC to more fully outline his clients' objections to full recognition of the proceedings in Ireland.

The temporary provisional recognition will not prohibit discovery related to opposition to the foreign recognition request. The stay would halt U.S. litigation outside the bankruptcy court.

Sontchi scheduled a full hearing on the request for provisional recognition for 11 a.m. ET on Oct. 8. He directed Durrer to have his witnesses present in the courtroom for that hearing.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.