Irish Bank seeks ruling on $69 million interest calculation dispute

By Caroline Salls

Pittsburgh, Oct. 21 – Irish Bank Resolution Corp. Ltd.’s foreign representatives are asking the U.S. Bankruptcy Court for the District of Delaware to set the post-liquidation interest rate for some of the company’s subordinated notes, according to a motion filed Friday.

Specifically, foreign representatives Kieran Wallace and Eamonn Richardson are asking the court to confirm that the federal judgment rate of 0.15% is the applicable legal rate to calculate post-liquidation interest for some U.S. subordinated notes issued by Irish Bank Resolution predecessor Anglo Irish Bank Corp. Ltd. to U.S. creditors.

In 2005, Anglo Irish issued $165 million of series A subordinated notes due Sept. 29, 2015 and $35 million of series B subordinated notes due Sept. 29, 2017.

The foreign representatives said the petition for appointment of a liquidator for Anglo Irish constituted an event of default under the subordinated notes.

Irish Bank has not made any payments on the notes since Dec. 29, 2012. As of the liquidation date, $200.27 million was due on the notes, including $200 million in principal and $270,108 in pre-liquidation interest.

Wallace and Richardson said the company’s special liquidators currently currently expect there to be sufficient funds available to make distributions on account of all remaining unsecured and subordinated claims, including claims arising in connection with the notes and post-liquidation interest.

According to the motion, the subordinated noteholders’ claims submissions indicate that many, if not all, of the noteholders have calculated post-liquidation interest claims using the contract rate, which ranges from 5.71% to 6.50%.

However, the representatives said the special liquidators disagree with this interest rate calculation.

Based on the amounts claimed by the noteholders, the special liquidators have calculated that post-liquidation interest yields a total of $70.52 million.

However, Wallace and Richardson said under U.S. law governing a liquidation, post-bankruptcy interest is payable “at the legal rate” for any allowed unsecured claims. Using the 0.15% federal judgment rate as of the liquidation date to calculate post-liquidation interest, the special liquidators estimate that post-liquidation interest yields a total of $1.96 million across the notes.

“Given the approximately $68.56 million difference between these figures, the foreign representatives require assistance from this court pursuant to sections 1507 and 1521 of the Bankruptcy Code in order to resolve this dispute and then allow the special liquidators to proceed to the adjudication of the distributions due on account of the U.S. law-governed notes,” the motion said.

Irish Bank Resolution, a Dublin-based successor to Anglo Irish Bank, filed for bankruptcy on Sept. 17, 2013. 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.