A meeting of creditors of Sir Anthony O’Reilly to see if a formal deal can be reached on the sale of his assets and the division of the proceeds is likely to follow Friday’s decision of the court in the Bahamas to declare him bankrupt. The judge in the case specifically mentioned that parties in the case could subsequently apply to the court to ratify such an agreement.
A deal appears possible with the bulk of the creditors, but AIB objected strongly in court on Friday and it remains to be seen if it takes further legal action, either in the Bahamas or Ireland, to try to safeguard its position.
The decision of Judge Milton Evans in the Supreme Court in Nassau to declare Sir Anthony bankrupt will protect his assets from moves by creditors in advance of an agreement being reached. This is unless AIB or another creditor can successfully challenge the right of the court to adjudicate on assets in other countries. A key part of AIB’s claim was that the court did not have jurisdiction to do this.
Composition
Representatives of Sir Anthony held meetings with creditors over the summer, and the court was told that 90 per cent of them approved a proposed agreement, with AIB the only objector. Under Bahamian bankruptcy law, this could have led to a formal agreement, or composition, with creditors, allowing for asset sales and a distribution of the proceeds without Sir Anthony actually being declared bankrupt.
However, after a lengthy court hearing on Friday, the judge decided to declare that Sir Anthony was bankrupt and left the way open for a “post-bankruptcy composition” – an agreement with creditors reached as part of a bankruptcy process. As well as AIB, four other banks were represented in court. They were ACC, BNY Mellon, EFG Bank Trusts (Bahamas) and Lloyds International Bank.
AIB has already taken extensive action in the Irish courts to demand information on Sir Anthony’s assets and seek to enforce security in some cases.
Procedures
A large part of Friday’s hearing was taken up with legal argument over whether Sir Anthony had followed the correct procedures in holding creditors meetings and applying to the court.
AIB held that he had not, as well as arguing that the court did not have jurisdiction, including in relation to making rulings which affected assets in other countries. Counsel for Sir Anthony disputed this and said that only one creditor, AIB, was objecting and did not want to share the proceeds of asset sales with others.
AIB would not comment yesterday on its position or whether it would now contemplate fresh legal action. Under Bahamian law it does not appear to have the power to block a creditors’ agreement, which requires approval from at least half of the creditors by number, who must represent three quarters of the money owed. However, details of the specific debts owed to each bank were not revealed in the hearing. Bankruptcy involving assets in different jurisdictions can often involve legal challenges in different countries, generally focused on which courts have jurisdiction to rule on what happens.
