transcript kieran wallace ibrc delaware chapter 15, 04.11.2013

8/14/2019 Transcript Kieran Wallace IBRC Delaware Chapter 15, 04.11.2013

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In The Matter Of:


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KIERAN WALLACE - 11/4/2013

1-800-325-3376 www.merrillcorp.com/law

Merrill Corporation - New York

Page 1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

-----------------------------------xIn re:THE IRISH BANK RESOLUTION Chapter 15

CORPORATION LIMITED Case No.

(IN SPECIAL LIQUIDATION) 13-121599 (CSS)

Debtor in a foreign proceeding-----------------------------------x

November 4, 2013

10:06 a.m.

Deposition of KIERAN WALLACE, held

at the offices of Skadden, Arps, Slate,

Meagher & Flom LLP, Four Times Square,

New York, New York, before Mark Richman

and Gail F. Schorr, Certified Shorthand

Reporters, Certified Realtime Reporters

and Notaries Public within and for the

State of New York.


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Page 2

1

2 A P P E A R A N C E S:

3 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

Attorneys for The Irish Bank Resolution4 Corporation Limited

300 South Grand Avenue

5 Los Angeles, CA 90071-3144

6 BY: ERIC S. WAXMAN, ESQ.

VAN C. DURRER II, ESQ.

7 -and- ANNIE Z. LI, ESQ.

8 ([email protected]) ([email protected])

9 ([email protected])

10LEONARD ZACK & ASSOCIATES

11 Attorneys for the Flynn Parties

405 Park Avenue, Suite 100112 New York, NY 10022

13 BY: LEONARD ZACK, ESQ.

([email protected])14

15 O'NEILL & COMPANY

Attorneys for the Flynn Parties16 240 Central Park South

Suite 23D17 New York, NY 10019

18 BY: LAWRENCE DANIEL O'NEILL, ESQ.

([email protected])19

20

21

22

23

24

25


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Page 3

1

2 A P P E A R A N C E S (Continued):

3 11:48:3LAW OFFICES OF DORON A. HENKIN, ESQ.

Attorneys for Castleway Properties LLC4 11:48:3and Walnut Rittenhouse LP

Radnor Financial Center

5 150 N. Radnor-Chester Road Suite F200

6 Radnor, PA 19087

7 BY: DORON A. HENKIN, ESQ. ([email protected])

8

9 ALSO PRESENT:

LEONA FLYNN10 JOHN FLYNN

ANDREW O'LEARY

11 MARK TRAYNORJAMES SHEEHAN

12

13

14

15

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21

22

23

24

25


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Page 4

1 KIERAN WALLACE

2 KIERAN WALLACE, called as a

3 witness, having been first duly

4 sworn by the Notary Public (Mark

5 Richman), was examined and

6 testified as follows:

7 10:06:2 EXAMINATION BY MR. O'NEILL:

8 10:06:2 Q. All right. Good morning.

9 10:06:2 A. Good morning.

10 10:06:2 Q. Can you tell me under the

11 10:06:3Companies Act in Ireland, what would be

12 10:06:3the normal process for a company's

13 10:06:4liquidation?

14 10:06:42 MR. WAXMAN: Calls for a legal

15 10:06:43 conclusion. You may answer.

16 10:06:45 A. There are two ways in which a

17 10:06:4company can go into liquidation in

18 10:06:5Ireland. One is by creditors voluntary

19 10:06:5liquidation and the other is by way of

20 10:06:5court liquidation. And then there's

21 10:07:02members voluntary liquidations for

22 10:07:05solvent companies, and all of those

23 10:07:0processes are governed by the company.

24 10:07:13 Q. I'm looking at the process.

25 10:07:1So it starts, A, someone, and in this


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1 KIERAN WALLACE

2 10:07:1case either the shareholders, the

310:07:2

directors or a creditor, decides to put

4 10:07:23the company into liquidation. And then

5 10:07:25what happens? What is the exact process

6 10:07:2that's followed? In a normal case? I'm

7 10:07:3sorry, he has done over 200 liquidations.

8 10:07:35 MR. WAXMAN: No, I know that

9 10:07:3 but you're calling for a long

10 10:07:3 narrative answer which is

11 10:07:3 inappropriate. You want to break

12 10:07:4 it down a little bit.

13 10:07:42 Q. So someone applies to the

14 10:07:45court to liquidate the company? Is that

15 10:07:4what happens?

16 10:07:4 A. Possible.

17 10:07:5 Q. Is there another way to

18 10:07:52liquidate a company besides applying to

19 10:07:5the court?

20 10:07:5 A. Yes, there's by way of

21 10:07:5shareholders resolution.

22 10:07:5 Q. The shareholders resolution,

23 10:08:0and the shareholders resolution can

24 10:08:02liquidate a solvent company?

25 10:08:0 A. Correct.


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310:08:0

conclusion. You may answer.

4 10:08:0 A. Correct.

5 10:08:0 Q. So for the process, let's take

6 10:08:12a shareholders resolution for

7 10:08:13liquidation. The shareholders pass a

8 10:08:1resolution saying we don't want to do

9 10:08:1this business any more, the company is

10 10:08:22solvent but we don't want to do this

11 10:08:23business any more and they pass a

12 10:08:25resolution liquidating the company.

13 10:08:2Someone then appoints you? Or they just

14 10:08:2dissolve the company? Someone appoints a

15 10:08:3liquidator?

16 10:08:32 MR. WAXMAN: The question is

17 10:08:33 how is a liquidator generally

18 10:08:35 appointed?

19 10:08:35 Q. Must there be a liquidator

20 10:08:3appointed or can they just liquidate the

21 10:08:3company on their own?

22 10:08:4 MR. WAXMAN: Vague.

23 10:08:4 Q. The shareholders?

24 10:08:4 MR. WAXMAN: If you understand

25 10:08:42 the question you can answer.


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2 10:08:43 A. Can you rephrase the question.

310:08:4

I'm not sure I understand the question

4 10:08:45you're asking.

5 10:08:4 Q. There's a group of

6 10:08:4shareholders, I hold a shareholders

7 10:08:5meeting, I pass a resolution to cease

8 10:08:53doing business and to liquidate the

9 10:08:5company. Must I appoint a liquidator?

10 10:09:0 A. You must seek to try to

11 10:09:02appoint a liquidator, yes.

12 10:09:03 Q. Must I apply to the court to

13 10:09:05appoint a liquidator or may I hire my own


15 10:09:0 A. You can hire your own

16 10:09:12liquidator.

17 10:09:13 Q. Without applying to the court?

18 10:09:15 A. Correct.

19 10:09:15 Q. Okay. And does that -- what

20 10:09:1is that liquidator's relationship to the

21 10:09:2court, if any, and to creditors of the

22 10:09:22company?

23 10:09:2 MR. WAXMAN: Compound. You

24 10:09:25 can answer.

25 10:09:3 A. There is a general obligation


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2 10:09:3on behalf of the liquidator to realize

310:09:3

the assets for the benefit of the

4 10:09:3creditors. But that liquidator always is

5 10:09:45in the key role of realizing the assets

6 10:09:4and distributing among creditors.

7 10:09:52 Q. And what if the shareholders

8 10:09:5dispute the method, the way the

9 10:09:5liquidator is proceeding with the

10 10:09:5liquidation, may they replace him with

11 10:10:0another liquidator? Without going to the

12 10:10:03court?

13 10:10:0 A. Yes, they can.

14 10:10:0 Q. So they can fire him and hire

15 10:10:1another liquidator? So the shareholders

16 10:10:13are completely in control of that entire

17 10:10:15process, there is no court supervision of

18 10:10:1that liquidation?

19 10:10:1 MR. WAXMAN: In that

20 10:10:1 particular type of proceeding?

21 10:10:2 Q. Of a solvent company, of a

22 10:10:22solvent company?

23 10:10:23 A. Correct.

24 10:10:2 Q. Okay. Now let's say the

25 10:10:2company is insolvent, the shareholders,


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2 10:10:3same scenario, hold a meeting, pass a

310:10:33

resolution and put the company into

4 10:10:3liquidation. Who then appoints the

5 10:10:3liquidator in an insolvent company?

6 10:10:4 A. There are two methods.

7 10:10:45Shareholders can appoint or the court can

8 10:10:4appoint.

9 10:10:4 Q. Okay. And if the shareholders

10 10:10:5appoint, is there someone that needs to

11 10:10:52approve that appointment in an insolvent

12 10:10:5company? In other words, does the court

13 10:10:5need to approve that appointment or can

14 10:11:0the shareholders choose a liquidator and

15 10:11:02appoint the liquidator to liquidate the

16 10:11:0company?

17 10:11:0 A. The shareholders can nominate

18 10:11:0a liquidator in an insolvent company.

19 10:11:12 Q. Right.

20 10:11:12 A. But there must be a following

21 10:11:1meeting of the creditors at which the

22 10:11:15creditors concur with that nomination.

23 10:11:1 Q. And if the creditors do not

24 10:11:2concur?

25 10:11:2 A. Then they can appoint their


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2 10:11:23own liquidator.

310:11:23

Q. They will appoint their own,

4 10:11:2so there will be two liquidators

5 10:11:2appointed?

6 10:11:2 A. No.

7 10:11:2 Q. So the shareholders'

8 10:11:2liquidator is supplanted by the

9 10:11:3liquidator appointed by the creditors?

10 10:11:33 A. That is correct.

11 10:11:35 Q. So, all right, now how long

12 10:11:42has KPMG been retained by the finance

13 10:11:45minister with regard to IBRC?

14 10:11:4 MR. WAXMAN: You can answer.

15 10:11:5 A. Myself and Mr. Richardson got

16 10:11:5appointed on the 7th of February 2013.

17 10:12:0 Q. I understand that. I mean

18 10:12:0KPMG, not yourself and Mr. Richardson,

19 10:12:0the firm of KPMG?

20 10:12:1 A. KPMG have never been appointed

21 10:12:12by the minister.

22 10:12:13 Q. Not as liquidators, but has

23 10:12:1been retained as an advisor to the

24 10:12:1government, never? So KPMG never worked,

25 10:12:1never worked for the Irish government


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2 10:12:2with regard to IBRC?

310:12:23

MR. WAXMAN: Well I'm going to

4 10:12:2 interpose an objection here that

5 10:12:2 anything that occurred prior to

6 10:12:2 February is not within the proper

7 10:12:3 scope of discovery pursuant to the

8 10:12:3 court's order. I'll give you a

9 10:12:33 little latitude here. But I want

10 10:12:3 to set down that time constraint

11 10:12:3 pursuant to the court's order very

12 10:12:3 early on.

13 10:12:43 MR. O'NEILL: I understand

14 10:12:4 that but this is relevant to

15 10:12:45 something very important.

16 10:12:4 MR. WAXMAN: Whether it is

17 10:12:4 relevant or not, the court has set

18 10:12:4 the relevant time for discovery and

19 10:12:5 that is post-February 2013. I'll

20 10:12:55 give you a little latitude here.

21 10:12:5 So I'll allow you to answer that

22 10:12:5 question. But as a general matter

23 10:13:0 we are not going to be inquiring as

24 10:13:02 to matters before February.

25 10:13:0 A. Can you rephrase your


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2 10:13:0question?

310:13:0

Q. Okay. Was KPMG retained at

4 10:13:1any point by the Irish government --

5 10:13:15 MR. WAXMAN: Lacks foundation.

6 10:13:1 Q. -- with regard to the

7 10:13:2liquidation of IBRC prior to your

8 10:13:23appointment as special liquidator?


10 10:13:2 You may answer.

11 10:13:2 A. No.

12 10:13:3 Q. No. So that KPMG was not

13 10:13:3appointed as advisor to the Irish

14 10:13:3government on the 12th of October, 2012?

15 10:13:4 A. No.

16 10:13:4 Q. Fine. All right. Now, are

17 10:13:4you familiar at all with the nature of

18 10:13:5the promissory notes that were issued by

19 10:13:53the Minister of Finance to Anglo Irish

20 10:13:5Bank/IBRC?

21 10:13:5 A. No.

22 10:14:0 Q. You have no knowledge of those

23 10:14:02notes?

24 10:14:05 A. I'm aware of them.

25 10:14:0 Q. Did you know anything about


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2 10:14:0them, the nature of them?

310:14:1

A. No.

4 10:14:1 Q. Are you aware that they were

5 10:14:13issued by the government in payment for

6 10:14:15the shares that the government acquired

7 10:14:1in Anglo Irish Bank?

8 10:14:2 A. Yes, I understand that to be

9 10:14:2the case.

10 10:14:2 Q. Okay. And do you understand

11 10:14:2the basis under which the government

12 10:14:2rescinded those promissory notes?

13 10:14:3 A. No.

14 10:14:3 Q. Okay. So you have no

15 10:14:3knowledge at all about why the government

16 10:14:3or how the government rescinded the

17 10:14:3financial obligation to the bank?

18 10:14:3 A. No.

19 10:14:4 Q. Wouldn't it be normal if you

20 10:14:43were appointed as a liquidator to a

21 10:14:4company where a shareholder had made a

22 10:14:52contractual obligation to pay for shares

23 10:14:5with cash and terminated unilaterally

24 10:15:03that contract, wouldn't it be of interest

25 10:15:0to the liquidator to determine the nature


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2 10:15:0of that termination and what the

310:15:1

obligation may be upon the part of that

4 10:15:15shareholder vis-a-vis that obligation to

5 10:15:1the company?

6 10:15:1 MR. WAXMAN: Counsel, that's a

7 10:15:1 speech, not a question. Can you

8 10:15:1 break it down.

9 10:15:2 MR. O'NEILL: I'm just asking.

10 10:15:23 Okay.

11 10:15:23 Q. Would you not in a normal

12 10:15:2liquidation be interested in inquiring as

13 10:15:2to the nature of obligations that third

14 10:15:3parties had to the company?

15 10:15:33 MR. WAXMAN: Incomplete

16 10:15:3 hypothetical. You can answer.

17 10:15:35 A. Yes.

18 10:15:3 Q. Okay. And why did you not

19 10:15:3inquire into the nature of the

20 10:15:3termination of the promissory notes?

21 10:15:4 A. I didn't say that.

22 10:15:4 Q. Did you inquire into the

23 10:15:4nature of the termination of the

24 10:15:5promissory notes? I asked you if you

25 10:15:52understood the nature of the promissory


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2 10:15:5notes and the termination of it, you said

310:15:55

no.

4 10:15:5 Did you, did you inquire into

5 10:15:5the nature of the termination of the

6 10:15:5promissory notes?

7 10:16:0 A. As liquidators, I am happy

8 10:16:0that the issue around the promissory

9 10:16:1notes has been properly dealt with.

10 10:16:1 Q. So you have determined, just

11 10:16:1to clarify to my mind, you have

12 10:16:1determined that the government's

13 10:16:2obligation under the promissory notes

14 10:16:23could be terminated unilaterally by the

15 10:16:25government?

16 10:16:3 A. I've taken legal advice on

17 10:16:33that point.

18 10:16:33 Q. And that legal advice is?

19 10:16:3 MR. WAXMAN: Instruct the

20 10:16:3 witness not to answer. You're not

21 10:16:3 getting into attorney-client

22 10:16:3 privileged information here,

23 10:16:4 counsel.

24 10:16:5 Q. When you looked at these notes

25 10:16:53I presume in making this inquiry as to


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2 10:16:55the nature of the promissory notes, do

310:16:5

you know how much the promissory notes

4 10:17:0were for?

5 10:17:03 A. I don't recall at the moment.

6 10:17:05 Q. Okay. The statement of

7 10:17:0affairs notes that the promissory notes

8 10:17:1were for 35 billion. Does that strike a

9 10:17:12bell, approximately?

10 10:17:15 A. I don't recall.

11 10:17:1 Q. The promissory notes, when you

12 10:17:2looked at this, were used as collateral

13 10:17:2for a loan made to the bank by the

14 10:17:32Central Bank; is that not correct?

15 10:17:3 A. That is my understanding.

16 10:17:3 Q. Okay. Now if the bank had

17 10:17:42collateral in the promissory notes, why

18 10:17:45do you suppose the bank was -- took out a

19 10:17:4security in the assets of the bank as

20 10:17:5well on the 12th of October, 2012?

21 10:17:53 MR. WAXMAN: Calls for

22 10:17:5 speculation, lacks foundation.

23 10:17:5 Q. Are you aware that the bank,

24 10:17:5that the Central Bank took out a

25 10:18:03security, registered a security against


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2 10:18:0the assets of IBRC on the 12th -- on the

310:18:0

18th of October?

4 10:18:0 A. Yes.

5 10:18:0 Q. 2012. Okay.

6 10:18:1 MR. WAXMAN: Just as a

7 10:18:15 caution, it's sometimes hard to

8 10:18:1 tell if the lawyer finished asking

9 10:18:1 the question and the reporter can

10 10:18:1 only take down one person talking

11 10:18:2 at a time. So the best way to make

12 10:18:22 sure he's completed his question is

13 10:18:2 to pause, make sure he's done and

14 10:18:2 then you can answer.

15 10:18:2 Q. So from your previous

16 10:18:3testimony I'm going to presume that KPMG

17 10:18:33was not involved in advising the

18 10:18:35government when this charge was taken,

19 10:18:4when this security was registered?

20 10:18:42 MR. WAXMAN: Is that a

21 10:18:42 question or are you just telling us

22 10:18:4 what your presumption is?

23 10:18:4 MR. O'NEILL: That's a

24 10:18:4 question.

25 10:18:4 Q. Was KPMG involved in advising


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2 10:18:4the government when this security was

310:18:5

registered?


5 10:18:53 You can answer.

6 10:18:53 A. No.

7 10:18:5 Q. When was it decided that IBRC

8 10:19:0would be liquidated?

9 10:19:1 A. When the government passed the

10 10:19:1act in the early hours of the 7th of

11 10:19:1February, 2013.

12 10:19:2 Q. I presume, though, that there

13 10:19:22was some decision making before that?

14 10:19:2Are you aware of any decision making

15 10:19:2before the legislation was drafted? It

16 10:19:2didn't come out of whole cloth. So

17 10:19:3before that --

18 10:19:33 MR. WAXMAN: Well, counsel,

19 10:19:3 again the time limit for this

20 10:19:3 deposition is post-February. So I

21 10:19:4 just want to make sure we're in

22 10:19:4 that, in the appropriate time

23 10:19:43 period here. Let's have the

24 10:19:45 question back.

25 10:19:5 (The requested portion of the


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2 10:19:5 record was read.)

310:19:5

MR. WAXMAN: Lacks foundation

4 10:19:5 too, but go ahead and answer the

5 10:19:5 question.

6 10:20:0 A. Yes, there was.

7 10:20:03 Q. And were you involved in that

8 10:20:0decision making?

9 10:20:0 A. No.

10 10:20:1 Q. Can you tell me who was

11 10:20:12involved? Do you know who was involved

12 10:20:1in that decision?

13 10:20:15 A. The government were involved.

14 10:20:1 Q. Do you know who drafted the

15 10:20:1IBRC Act?

16 10:20:22 A. No.

17 10:20:25 Q. Do you know who organized --

18 10:20:2who developed the financial structure of

19 10:20:32the liquidation of IBRC?


21 10:20:3 A. Yes.

22 10:20:3 Q. Was it KPMG?

23 10:20:4 A. No.

24 10:20:4 Q. It was not yourselves?

25 10:20:42 A. No.


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2 10:20:43 Q. Can you tell me who it was?

310:20:4

MR. WAXMAN: If you know.

4 10:20:4 A. Department of Finance.

5 10:20:4 Q. By themselves?

6 10:20:5 A. Correct.

7 10:20:5 Q. When were you first asked to

8 10:20:5be a special liquidator to liquidate the

9 10:21:0bank?

10 10:21:0 A. Late October 2012.

11 10:21:2 Q. Late October 2012. And at the

12 10:21:3time you were asked what was your role?

13 10:21:3From that time until the 7th of February,

14 10:21:3what was your role?

15 10:21:3 A. No role.

16 10:21:3 Q. No role. That's all, no

17 10:21:4advisory, no consultation, no vetting of

18 10:21:4plans or materials, no role?

19 10:21:52 MR. WAXMAN: Compound.

20 10:21:52 Q. I just want to clarify no role

21 10:21:5at all, no discussions with anyone, you

22 10:21:5just waited?

23 10:21:5 A. There were discussions.

24 10:21:5 Q. Okay. And the discussions

25 10:22:0were?


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2 10:22:0 A. Just general in nature.

310:22:05

Q. I'm a little troubled. Okay.

4 10:22:12So the discussions were about the

5 10:22:1liquidation of the bank in October, late

6 10:22:1October of 2012.

7 10:22:2 A. Can you rephrase again.

8 10:22:22 Q. With the government, you had

9 10:22:23discussions with the government about the

10 10:22:25liquidation in late October 2012?

11 10:22:3 A. I wouldn't say I had

12 10:22:3discussions, no.

13 10:22:35 Q. Were you part of the planning

14 10:22:3of the liquidation in October 2012?

15 10:22:4 MR. WAXMAN: Asked and

16 10:22:42 answered. Counsel, February 2013.

17 10:22:4 I'm cutting you off now. You need

18 10:22:4 to stay in the period that the

19 10:22:4 court indicated was relevant for

20 10:22:5 discovery.

21 10:23:0 Q. Now, do you know why the

22 10:23:0government liquidated the bank?

23 10:23:0 A. No.

24 10:23:1 Q. So you're not privy to any

25 10:23:1decisions by the government on that?


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2 10:23:15 A. No.

310:23:1

Q. Are you privy to any

4 10:23:22discussions as to why this liquidation

5 10:23:25happened so precipitously?

6 10:23:2 MR. WAXMAN: It's

7 10:23:2 argumentative as phrased. You can

8 10:23:3 answer.

9 10:23:3 A. No.

10 10:23:3 Q. You were contacted -- when

11 10:23:3were you contacted and told that the

12 10:23:3liquidation was going to happen?

13 10:23:43 A. You asked your questions --

14 10:23:5can you ask your question again.

15 10:23:5 Q. When were you told that you

16 10:23:52were going to assume the role of special

17 10:23:5liquidator? You were told in October of

18 10:23:52012 that you were going to be appointed,

19 10:23:5that the government was going to

20 10:23:5liquidate the bank and they wanted you

21 10:24:0and Mr. Richardson to be spec

22 10:24:03liquidators.

23 10:24:03 MR. WAXMAN: Counsel, that's

24 10:24:05 not his testimony so don't recast

25 10:24:0 his testimony as part of your


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2 10:24:0 question. Just ask the question

310:24:0

without the preface. That's not

4 10:24:1 what he said. The record will

5 10:24:12 speak for itself.

6 10:24:13 Q. When were you appointed? I

7 10:24:1mean when were you told by the Department

8 10:24:1of Finance that you would be assuming the

9 10:24:1role of special liquidator on the 6th of

10 10:24:2February?

11 10:24:2 A. The only day that I got

12 10:24:3confirmation that I would actually be one

13 10:24:32of the special liquidators to IBRC was in

14 10:24:35the afternoon of the 6th of February.

15 10:24:4 Q. You have read the statement of

16 10:24:4affairs?

17 10:24:53 A. Correct.

18 10:24:5 Q. The statement of affairs, the

19 10:24:5directors of the bank contend that the

20 10:25:0bank was solvent and would have stayed

21 10:25:0solvent absent the rescission of the

22 10:25:15promissory notes. Do you agree with that

23 10:25:1conclusion?

24 10:25:25 A. No.

25 10:25:2 Q. Can you expound as to why you


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2 10:25:2do not agree?

310:25:35

A. Because the value of the

4 10:25:3bank's assets is less than its

5 10:25:4liabilities.

6 10:25:4 Q. So to clarify, it is your

7 10:25:4opinion that on the 5th of February, the

8 10:25:5value of the assets including the

9 10:25:53promissory notes due but not yet paid to

10 10:25:5the bank were less than its liabilities?

11 10:26:03 A. Yes.

12 10:26:0 Q. So you believe, just to

13 10:26:0clarify, that on the 5th of February,

14 10:26:1prior to the passage of the IBRC

15 10:26:13liquidation, the bank was trading while

16 10:26:15insolvent?

17 10:26:1 A. No.

18 10:26:1 Q. Can you explain why?

19 10:26:1 A. The reason being that on a

20 10:26:2cash test, the bank had cash facilities

21 10:26:3being provided to it on a rolling basis

22 10:26:3by the Central Bank.

23 10:26:3 Q. Secured against the promissory

24 10:26:3notes?

25 10:26:3 A. Correct.


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2 10:26:3 Q. Had all the promissory notes

310:26:43

been drawn down in the form of, in the

4 10:26:4form of loans from the Central Bank?


6 10:26:5 Q. I'm a bit baffled that you

7 10:26:5don't recall as liquidator.

8 10:27:0 MR. WAXMAN: Counsel, don't

9 10:27:02 argue with the witness. Just ask

10 10:27:03 questions. Whether you are baffled

11 10:27:0 or not is irrelevant.

12 10:27:15 Q. Where in the IBRC Act is the

13 10:27:1minister given the authority to rescind

14 10:27:2the promissory notes?

15 10:27:2 MR. WAXMAN: Lacks foundation,

16 10:27:23 calls for a legal conclusion. You

17 10:27:25 may answer if you know.

18 10:27:2 A. I do not know.

19 10:27:2 Q. Okay. Do you know under what

20 10:27:2basis -- in your investigation of the

21 10:27:33validity of the withdrawal, under what

22 10:27:3basis did the Minister of Finance

23 10:27:3withdraw the promissory notes?

24 10:27:4 MR. WAXMAN: In answering that

25 10:27:4 question make sure to exclude any


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2 10:27:4 legal advice you may have received

310:27:4

on that point. If you can answer

4 10:27:4 the question without disclosing

5 10:27:4 legal advice, please do so.

6 10:27:5 A. I cannot without dealing with

7 10:27:5legal advice.

8 10:27:55 Q. So what was the process that

9 10:28:1took place on the 7th of February? Can

10 10:28:22you go through the process on the 7th of

11 10:28:2February that put the bank into


13 10:28:2 MR. WAXMAN: Vague. You can

14 10:28:2 answer.

15 10:28:2 A. There was an act passed by

16 10:28:3Parliament which allowed for the

17 10:28:4appointment of special liquidators to

18 10:28:4IBRC and at around 7:40 a.m. on that

19 10:28:5morning, give or take, myself and Eamonn

20 10:28:5Richardson were appointed joint special

21 10:28:5liquidators to IBRC and at that moment we

22 10:29:0took control of the operations of the

23 10:29:0bank and we commenced the winding up of

24 10:29:12the bank and its subsidiaries.

25 10:29:1 Q. And when were the promissory


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2 10:29:1notes rescinded? Was it after you were

310:29:1

appointed or before?

4 10:29:22 A. After our appointment.

5 10:29:2 Q. Did you attempt to prevent the

6 10:29:32promissory notes being withdrawn?

7 10:29:35 A. No.

8 10:29:3 Q. Why?

9 10:29:4 A. Back to legal advice.

10 10:29:43 Q. Okay. Wouldn't a liquidator,

11 10:29:52a competent liquidator in a normal

12 10:29:5liquidation attempt to prevent a debt

13 10:29:5owed to the company in insolvency being

14 10:30:03withdrawn by the debtor?


16 10:30:0 hypothetical. You can answer.

17 10:30:23 A. The role of any liquidator,

18 10:30:25any competent liquidator is to ensure

19 10:30:2that best value is achieved for each and

20 10:30:3every obligation that is due and owing to

21 10:30:3the bank.

22 10:30:3 Q. And why did you choose in this

23 10:30:4case not to try to retain the 35 billion

24 10:30:4owed to the bank by the government?

25 10:30:5 MR. WAXMAN: Again, if that


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2 10:30:5 was based on legal advice, you can

310:30:52

state that, but do not go into the

4 10:30:5 substance of the advice itself.

5 10:30:5 A. It was based on legal advice.

6 10:30:5 Q. Were you ever directed by

7 10:31:03anyone in the Department of Finance not

8 10:31:05to question the withdrawal of the

9 10:31:0promissory notes?

10 10:31:1 A. No.

11 10:31:25 Q. Let's go back on to the events

12 10:31:35of the 7th, a very busy day. The

13 10:31:42promissory notes were withdrawn. When

14 10:31:45did the Central Bank present you with a

15 10:31:5demand for repayment of the 30 billion --

16 10:31:55no, the 24 billion that had been loaned

17 10:31:5to the bank by the Central Bank?

18 10:32:05 A. My recollection is that it was

19 10:32:0on the afternoon of the 7th of February.

20 10:32:1 Q. So the promissory notes were

21 10:32:12withdrawn when, in the morning?


23 10:32:1 Q. Do you remember? Were the

24 10:32:1promissory notes withdrawn before or

25 10:32:2after the demand from the Central Bank?


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2 10:32:22 A. I actually don't recall.

310:32:2

Q. And I understand -- can you

4 10:32:33tell me the security interest taken by

5 10:32:35the Central Bank, the charge held by the

6 10:32:3Central Bank over the assets of IBRC,

7 10:32:4what happened to that?


9 10:32:5 A. That charge was transferred to

10 10:32:5NAMA.

11 10:32:5 Q. Are you privy to the reason

12 10:33:0that charge was transferred?

13 10:33:0 A. Yes.

14 10:33:0 Q. Can you explain why that

15 10:33:0charge was transferred?

16 10:33:13 A. Because NAMA had agreed to

17 10:33:1provide funding to the special

18 10:33:1liquidators in order to facilitate the

19 10:33:2winding up of the bank.

20 10:33:2 Q. So just to go back to those

21 10:33:3events, the obligation of the government

22 10:33:33to the bank was withdrawn; the Central

23 10:33:3Bank demanded repayment of the loans that

24 10:33:3were made, secured by that debt; the

25 10:33:4charge that was entered into in October


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2 10:33:5was transferred to NAMA; was that on the

310:33:55

7th?


5 10:33:5 Q. Are you familiar with the

6 10:34:02provisions of section 10 of the IBRC Act?

7 10:34:0 A. No.

8 10:34:0 Q. We will get back to that one,

9 10:34:13dig out a copy and review it.

10 10:34:1 Is it possible that the, in

11 10:34:1your mind that the promissory note was

12 10:34:22transferred to NAMA so that the validity

13 10:34:2of the note could not be transferred

14 10:34:2pursuant to the IBRC Act?

15 10:34:3 MR. WAXMAN: Calls for

16 10:34:33 speculation.

17 10:34:33 A. I don't actually understand

18 10:34:35the question.

19 10:34:3 Q. Okay. Well if you're not --

20 10:34:3we will get to the IBRC Act in a minute.

21 10:34:4We are going to go through the nature of

22 10:34:42it. Okay.

23 10:34:4 Who oversees the Central Bank?

24 10:34:5 A. My view is they're an

25 10:35:03independent regulator.


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2 10:35:0 Q. Well they are appointed by

310:35:0

someone. Who appoints them?

4 10:35:13 A. I don't know.

5 10:35:1 Q. Who oversees NAMA?

6 10:35:2 A. Department of Finance.

7 10:35:2 Q. And who do you report to?

8 10:35:3 A. I have a dual reporting role.

9 10:35:3I have a reporting obligation to the

10 10:35:4Minister of Finance and I also have an

11 10:35:43obligation to report to creditors at

12 10:35:45large.

13 10:35:45 Q. Now when we started you said

14 10:35:5that in a normal liquidation of an

15 10:35:53insolvent company the shareholders would

16 10:35:5propose a liquidator and then there would

17 10:36:0be a meeting of creditors who could veto

18 10:36:0that liquidator. Was there a meeting of

19 10:36:1creditors in the IBRC liquidation?

20 10:36:1 A. Let me go back to what I said.

21 10:36:1I said there were two ways in which an

22 10:36:2insolvent company can be put into

23 10:36:22liquidation in Ireland. One is by way of

24 10:36:2shareholder resolution and the other is

25 10:36:2by way of court appointment. And the


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2 10:36:32shareholder resolution is the example

310:36:35

we're talking about. And in that example

4 10:36:3or in that method, there is a meeting of

5 10:36:4creditors, not in a court liquidation.

6 10:36:4 Q. I understand. But again are

7 10:36:5you aware of a shareholder resolution in

8 10:36:55this case by the sole shareholder, the

9 10:36:5sole member, that is the Irish

10 10:37:0government, the Department of Finance, to

11 10:37:02put IBRC into liquidation?

12 10:37:0 A. No.

13 10:37:05 Q. The statement of affairs says

14 10:37:1there was such a shareholder's resolution

15 10:37:1to put IBRC into liquidation?

16 10:37:1 MR. WAXMAN: Is that a

17 10:37:2 question?

18 10:37:2 Q. Yes. I'm saying you're not

19 10:37:2aware that on the 6th the government of

20 10:37:2Ireland passed a shareholder's resolution

21 10:37:2to put the bank you're liquidator of in

22 10:37:3liquidation, you're not aware of that

23 10:37:3resolution?

24 10:37:32 A. My view is that the Irish --

25 10:37:3that the actual politicians in Ireland


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2 10:37:43who are elected into office decided to

310:37:45

pass an act which in itself put IBRC into

4 10:37:4liquidation.

5 10:37:4 Q. So you are not aware there

6 10:37:5exists a resolution that put IBRC into



9 10:37:55 answered, also vague.

10 10:37:5 Q. No, I'd like an answer to

11 10:37:5that. I've not gotten an answer to that.

12 10:38:0Yes or no, are you aware of a resolution

13 10:38:03that put, passed on the -- presented to

14 10:38:0the directors of IBRC on the 6th of

15 10:38:1February that put IBRC into liquidation?

16 10:38:12 MR. WAXMAN: Well, he doesn't

17 10:38:13 have to answer you yes or no,

18 10:38:15 counsel, he has to give you a full

19 10:38:1 and complete answer. So you can go

20 10:38:1 ahead and answer the question.

21 10:38:2 Q. To the question.

22 10:38:2 A. I'm personally not aware, no.

23 10:38:22 Q. So what kind of liquidation

24 10:38:25would you characterize the IBRC

25 10:38:2liquidation? There are two types, one is


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2 10:38:2a court liquidation, as you said, and the

310:38:3

other is a shareholders liquidation.

4 10:38:35Which would you characterize the IBRC



7 10:38:3 Q. Well there are only two types.

8 10:38:4Pick A or B?

9 10:38:42 A. I'm not going to pick either.

10 10:38:45I think it's a combination of both. I

11 10:38:4think that there's the normal obligations

12 10:38:53the liquidator has in respect of doing a

13 10:38:5liquidation of an insolvent company, and

14 10:39:0secondly, there's the full ability of any

15 10:39:03creditor to reach out to the court --

16 10:39:0 Q. That's not -- excuse me.

17 10:39:0 MR. WAXMAN: Counsel, don't

18 10:39:0 interrupt the witness. Let him

19 10:39:1 finish.

20 10:39:1 MR. O'NEILL: He's not

21 10:39:12 answering my question.

22 10:39:13 MR. WAXMAN: That doesn't

23 10:39:1 matter. You can move to strike it

24 10:39:15 if you don't find it responsive.

25 10:39:1 What you cannot do is interrupt the


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1 KIERAN WALLACE

2 10:39:1 witness. May I please have the

310:39:1

answer that was given read back and

4 10:39:2 then ask you to continue your

5 10:39:22 answer.

6 10:39:3 (The requested portion of the

7 10:39:3 record was read.)

8 10:39:3 A. -- to ask the court to rule on

9 10:39:4any matter of which that creditor is not

10 10:39:43happy about in the context of the

11 10:39:4carrying out of the liquidation.

12 10:39:5 Q. In a court liquidation, court

13 10:39:5ordered liquidation, how does that come

14 10:40:0about?

15 10:40:02 MR. WAXMAN: Vague. You can

16 10:40:03 answer.

17 10:40:0 A. There is a petition to the

18 10:40:0court by creditor or by shareholder or by

19 10:40:1directors of the company to seek the

20 10:40:1authorization of the court to place that

21 10:40:2company into liquidation.

22 10:40:22 Q. Was there such a petition in

23 10:40:2this case?

24 10:40:25 A. No.

25 10:40:2 Q. So this was not a court


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310:40:2

A. No.

4 10:40:3 Q. So it is not a court

5 10:40:3liquidation. So this was a shareholder's

6 10:40:3liquidation? No?

7 10:40:3 A. I didn't say that.

8 10:40:4 Q. Okay. Was this a

9 10:40:42shareholder's liquidation?

10 10:40:43 A. My personal view, no.

11 10:40:4 Q. So this was a sui generis


13 10:40:4 A. Sorry, what?

14 10:40:5 Q. One of a kind, all by itself?

15 10:40:5 A. It's a liquidation which is

16 10:40:5based on fundamental principles of all

17 10:41:0liquidations, but has an act which is a

18 10:41:0new act for the purpose of this

19 10:41:0liquidation underpinning the liquidation

20 10:41:0itself.

21 10:41:12 Q. Does the act allow for meeting

22 10:41:1of creditors to vet the liquidator?


24 10:41:2 conclusion. You can answer.

25 10:41:23 A. My understanding is that the


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2 10:41:25normal provisions of reporting to

310:41:3

creditors after two years in the

4 10:41:3liquidation, which is provided for under

5 10:41:3the Companies Act, applies. So after the

6 10:41:42passage of time, the appropriate time

7 10:41:4which is under the Companies Acts, the

8 10:41:4liquidator will call meetings of members

9 10:41:4of creditors.

10 10:41:5 Q. But in a normal liquidation,

11 10:41:5the court orders the meeting of creditors

12 10:42:03to be called?

13 10:42:0 A. Incorrect.

14 10:42:05 Q. Okay. Who orders the meeting

15 10:42:0of creditors to be called in a

16 10:42:0shareholder liquidation or in an

17 10:42:1insolvent company? Under what basis is

18 10:42:1the meeting of creditors held?

19 10:42:15 MR. WAXMAN: I can't

20 10:42:1 understand your question, now,

21 10:42:1 counsel. You've got three

22 10:42:1 different questions going on there.

23 10:42:2 Q. We established that in an

24 10:42:22insolvent company the shareholders may

25 10:42:25appoint a liquidator.


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2 10:42:2 MR. WAXMAN: I think the

310:42:2

witness's testimony is what it is.

4 10:42:3 I'm just asking you to ask a

5 10:42:33 question that is a little bit more

6 10:42:3 less muddled than the last.

7 10:42:3 Q. Under what basis is the

8 10:42:4meeting, under that scenario under what

9 10:42:42basis is the meeting of creditors called?

10 10:42:4 A. The meeting of creditors in

11 10:42:4any liquidation is governed by the

12 10:42:52Companies Act.

13 10:42:53 Q. Yes, I understand.

14 10:42:5 A. And they set out the

15 10:42:55principles and the time frames under

16 10:42:5which those meetings are to be called,

17 10:42:5when they're to be called and how they're

18 10:43:0to be called. And those principles apply

19 10:43:0whether it is a court liquidation or in a

20 10:43:0creditor's voluntary liquidation, which

21 10:43:0is the other method of liquidation we

22 10:43:1spoke about.

23 10:43:12 Q. Do you know does the IBRC Act

24 10:43:1eliminate that provision of the Companies

25 10:43:2Act which calls for a meeting of


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2 10:43:2creditors to be called within 30 days of

310:43:2

the declaration of insolvency of a

4 10:43:2company?



7 10:43:3 A. Can you point to me the 30 day

8 10:43:33rule you're talking to, about?

9 10:43:35 Q. Yes. Give me a moment. We

10 10:43:3will get back to that.

11 10:43:3 A. Okay.

12 10:43:3 Q. The meeting of creditors was

13 10:43:4not called in this case?

14 10:43:4 A. Correct.

15 10:43:4 Q. Has there been a meeting of

16 10:43:43creditors?

17 10:43:43 A. No.

18 10:43:4 Q. And can you say why there has

19 10:43:4not been a meeting of creditors?

20 10:43:5 A. Because I don't believe

21 10:43:53there's any obligation for a meeting of

22 10:43:5creditors at this point.

23 10:43:5 Q. And why is that?

24 10:44:0 A. Because we are following the

25 10:44:03normal provisions around calling


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1 KIERAN WALLACE

2 10:44:0creditors meetings.

310:44:1

Q. Okay. You're confusing me

4 10:44:12now. You have said that in an insolvent

5 10:44:1company the shareholders may appoint a

6 10:44:1liquidator. Which has happened in this

7 10:44:2case, the sole shareholder appointed you

8 10:44:23as a liquidator. There is then a meeting

9 10:44:25of creditors who must approve that

10 10:44:2appointment. Was that meeting called to

11 10:44:3approve the appointment of you, yourself

12 10:44:32and Mr. Richardson as liquidators?


14 10:44:35 answered. You can answer again.

15 10:44:3 A. What I said was there are two

16 10:44:3ways in which a company can be placed

17 10:44:4into liquidation. Only in the

18 10:44:4circumstances of the, as you call it, the

19 10:44:4shareholder's resolution is there any

20 10:44:5requirement for a meeting of creditors to

21 10:44:53approve the appointment of the

22 10:44:55liquidator. That does not arise in a

23 10:44:5court liquidation.

24 10:44:5 Q. Okay. So you're saying this

25 10:45:0is a court liquidation?


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310:45:0

answered. That's not what he's

4 10:45:02 testified to, counsel. What he

5 10:45:05 said is it has aspects of both and

6 10:45:0 that it's pursuant to special

7 10:45:0 legislation. So don't misstate the

8 10:45:1 witness's testimony. I understand

9 10:45:12 that you're unhappy with that

10 10:45:13 situation but the legislation is

11 10:45:15 what it is.

12 10:45:1 Q. Okay. Let's talk a little bit

13 10:45:23about the charge taken over the assets of

14 10:45:2IBRC by the Central Bank. You have

15 10:45:3provided a copy of this charge, it was

16 10:45:3taken out on the 18th of October. The

17 10:45:4company was liquidated or put into

18 10:45:42liquidation on the 7th of February.

19 10:45:4 Why would that charge not be

20 10:45:53perceived to be a fraudulent preference

21 10:45:5under section 286 of the Companies Act?

22 10:46:02 MR. WAXMAN: I'm not sure that

23 10:46:0 I understand what you mean by

24 10:46:0 perceived and calls for a legal

25 10:46:0 conclusion. But if you understand


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2 10:46:0 the question you can answer it.

310:46:1

A. What I would say is back to


5 10:46:1 MR. WAXMAN: Then I would

6 10:46:15 instruct you not to reveal the

7 10:46:1 advice of your counsel in response

8 10:46:1 to the question. If your

9 10:46:22 understanding is based on legal

10 10:46:23 advice, you should plainly state

11 10:46:2 that so the record will reflect

12 10:46:2 that.

13 10:46:2 A. My understanding is based on


15 10:46:2 Q. In your prior liquidations, if

16 10:46:3such a charge were taken within six

17 10:46:42months of the company being insolvent,

18 10:46:45would you have challenged that security

19 10:46:4in the court?


21 10:46:5 hypothetical. Are you asking him

22 10:46:5 if that's ever occurred?

23 10:46:53 MR. O'NEILL: Yes.

24 10:46:5 MR. WAXMAN: Or are you just

25 10:46:55 suggesting it did?


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2 10:46:5 Q. Have you ever challenged a

310:46:5

security taken within six months of

4 10:46:5insolvency in the court?

5 10:47:0 A. Once.

6 10:47:0 Q. How many times has it happened

7 10:47:05in your liquidation that such a charge

8 10:47:0was taken within the six month period?

9 10:47:13 A. Quite a number of times.

10 10:47:15 Q. You've only challenged one?

11 10:47:1 A. Correct.

12 10:47:1 Q. Did anyone in the Department

13 10:47:2of Finance instruct you not to challenge

14 10:47:3the Central Bank's charge over the assets

15 10:47:33of IBRC?


17 10:47:3 answered. You can answer again.

18 10:47:4 A. No.

19 10:47:4 Q. Why did the original timetable

20 10:48:0that was announced at the time of the

21 10:48:05liquidation to transfer, to sell and

22 10:48:12transfer the unsold assets to NAMA by

23 10:48:15August 2013 slip?


25 10:48:25 If you can answer, go ahead.


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2 10:48:2 A. The main reason was when we

310:48:2

actually got appointed as liquidators to

4 10:48:33the bank, we realized that the work that

5 10:48:3would need to be done to get those assets

6 10:48:42sold would take longer than what was

7 10:48:45envisaged prior to liquidation.

8 10:48:4 Q. What are the terms of your

9 10:48:52engagement as special liquidator? In

10 10:48:55other words, how are you hired and who

11 10:49:0may terminate your engagement?

12 10:49:0 A. I have a letter of engagement.

13 10:49:12And again, my understanding would be that

14 10:49:15the minister can terminate my role as

15 10:49:1liquidator or indeed the creditors if

16 10:49:2they are unhappy with the work that we're

17 10:49:2doing would have the ability to apply to

18 10:49:2court to have us removed.

19 10:49:32 Q. And under what conditions can

20 10:49:3the minister terminate your role as



23 10:49:4 Q. You don't know. Okay. In the

24 10:50:23one case that you have where you

25 10:50:25challenged a security interest taken


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2 10:50:3within six months of the liquidation,

310:50:35

what was the basis of that challenge?

4 10:50:3 MR. WAXMAN: Well let's get a

5 10:50:3 date on that first because if it's

6 10:50:4 prior to February then I'm not

7 10:50:4 going to allow you to inquire into

8 10:50:43 it. So can you put a time frame on

9 10:50:45 it?

10 10:50:4 A. First of all it's currently in

11 10:50:4the court system so I would be

12 10:50:5uncomfortable to discuss it.

13 10:50:5 Q. Can you explain as a

14 10:50:53liquidator then, your professional

15 10:50:55opinion, under what basis would you make

16 10:50:5a decision to challenge a fraudulent

17 10:51:0preference?

18 10:51:05 A. I would say there would need

19 10:51:0to be clear evidence of two issues:

20 10:51:1Intent and secondly, inappropriate

21 10:51:15consideration for the taking of the

22 10:51:1charge at that time.

23 10:51:1 Q. Those would be the two?

24 10:51:1 A. Yes.

25 10:51:2 Q. What limitations has the IBRC


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2 10:51:42Act placed upon you in your functions as

310:51:45

liquidator vis-a-vis your normal

4 10:51:5functions in a standard liquidation?

5 10:51:53 MR. WAXMAN: Calls for a

6 10:51:5 narrative.

7 10:52:02 Q. Are there any limitations on

8 10:52:03your powers as a liquidator imposed by

9 10:52:0the IBRC Act?

10 10:52:13 A. Yes.

11 10:52:1 Q. Can you explain what those

12 10:52:1are?

13 10:52:1 A. Those decisions which are

14 10:52:23given to us by way of ministerial

15 10:52:2instruction.

16 10:52:32 Q. So the minister can direct you

17 10:52:3by instruction to perform your tasks in a

18 10:52:3particular way?

19 10:52:4 MR. WAXMAN: Misstates his

20 10:52:42 testimony.

21 10:52:45 Q. What things may the minister

22 10:52:4instruct you on?

23 10:52:5 A. There could be a range of

24 10:52:5issues that the minister decides to

25 10:52:55instruct us on. All of those


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2 10:52:5instructions are public and in the public

310:53:0

domain.

4 10:53:0 Q. Are there any limitations in

5 10:53:0the things the minister may instruct you

6 10:53:0on?



9 10:53:12 A. I do not believe so.

10 10:53:13 Q. You state in your original

11 10:53:3declaration and in your supplemental

12 10:53:3declaration and just now again that any

13 10:53:43unhappy creditor may go to court and

14 10:53:5challenge you, seek to replace you, you

15 10:54:0said.

16 10:54:0 I presume that's under Section

17 10:54:03280 of the Companies Act; is that

18 10:54:0correct?

19 10:54:0 A. I don't recall the section.

20 10:54:0 Q. But under the Companies Act

21 10:54:12any unsatisfied creditor can go to court?

22 10:54:1 A. Correct.

23 10:54:15 Q. And seek to replace you?

24 10:54:1 A. Correct.

25 10:54:1 Q. Have you terminated?


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2 10:54:2 A. My understanding.

310:54:22

Q. It is your understanding that

4 10:54:25the court has the power to terminate your

5 10:54:2appointment?

6 10:54:2 A. My understanding is the court

7 10:54:3can rule on the termination of my

8 10:54:33appointment, yes.

9 10:54:3 Q. So the court may terminate

10 10:54:35your contract?


12 10:54:3 answered.

13 10:54:3 Q. You believe?

14 10:54:3 A. I do.

15 10:54:3 Q. Can you tell me how many

16 10:54:5challenges have been brought under

17 10:54:5Section 280, or under the Companies Act

18 10:55:0to decisions that you have made? I'm not

19 10:55:0talking about permission to sue under

20 10:55:0Section 6, I'm talking about challenges

21 10:55:0to your decisions under Section 280 of

22 10:55:1the Companies Act?


24 10:55:13 Q. Are there any?

25 10:55:15 A. I think there's one.


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2 10:55:3 Q. Do you recall that one?

310:55:4

A. No, I don't.

4 10:55:4 Q. Is the case pending or is that

5 10:55:43resolved?

6 10:55:4 A. Case pending.

7 10:55:4 Q. Under Section 6 of the IBRC

8 10:55:5Act, as you're well aware, a party is

9 10:55:5required to obtain permission of the

10 10:55:5court to bring an action. Have you ever

11 10:56:0opposed any of those actions under

12 10:56:0Section 6?

13 10:56:1 A. One.

14 10:56:1 Q. And why?

15 10:56:1 A. Because it was going to be a

16 10:56:2case where it was our view that that case

17 10:56:2shouldn't continue on at that time.

18 10:56:3 Q. In a normal liquidation, have

19 10:56:33you ever opposed -- well is there a

20 10:56:3procedure for the liquidator to oppose a

21 10:56:4creditor bringing an action against the


23 10:56:4 A. Yes.

24 10:56:4 Q. Have you ever opposed an

25 10:56:45action in a normal liquidation?


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2 10:56:4 A. Yes.

310:56:4

Q. You have. What provisions are

4 10:56:5those that provide for that?

5 10:56:52 A. I don't recall the actual

6 10:56:55section numbers.

7 10:57:1 MR. WAXMAN: We've been going

8 10:57:1 about an hour, counsel, so at a

9 10:57:13 point convenient to you, IT doesn't

10 10:57:1 have to be right now, we'll take

11 10:57:1 our first break, but you pick the

12 10:57:1 time.

13 10:57:1 MR. O'NEILL: I'm happy to

14 10:57:1 take a break now.

15 10:57:2 (A recess was had.)

16 11:18:42 MR. O'NEILL: During the break

17 11:18:43 we have called the court. We

18 11:18:4 object to the time limitation.

19 11:18:4 MR. WAXMAN: It is my

20 11:18:4 understanding the time limitation

21 11:18:5 is based on the court's present

22 11:18:5 rulings, but of course you're free

23 11:18:53 to call the court.

24 11:18:5 MR. O'NEILL: We have a call

25 11:18:5 into the court.


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2 11:18:5 Q. Now let me go back, if I may.

311:19:0

You stated that under the Companies Act,

4 11:19:0the provisions, the winding up

5 11:19:0provisions, that a dissatisfied creditor

6 11:19:1can go into court and have you replaced

7 11:19:1under this, in this liquidation, right

8 11:19:1now in the IBRC liquidation.

9 11:19:22 Can you find, and this is the

10 11:19:2act, it would appear to me that the

11 11:19:2portion of the act that provides for that

12 11:19:3has been stricken by the IBRC

13 11:19:3legislation. And can you confirm that

14 11:19:3that is the case or can you find where in

15 11:19:42this act that provision where a

16 11:19:4dissatisfied creditor can have you

17 11:19:4replaced is embodied?

18 11:19:52 MR. WAXMAN: All right. So

19 11:19:52 let me make sure I understand what

20 11:19:5 you're asking him to do. You want

21 11:19:55 this witness to sit here and review

22 11:19:5 every page of the act and also the

23 11:19:5 Companies Act and track the

24 11:20:0 passages to make sure that his

25 11:20:03 recollection of the provisions are


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2 11:20:05 correct, because that's what we

311:20:0

will have to do to be able to

4 11:20:0 answer that question.

5 11:20:1 MR. O'NEILL: I understand

6 11:20:1 that. But the man has done 200

7 11:20:13 liquidations under this

8 11:20:15 legislation.

9 11:20:1 MR. WAXMAN: But, counsel,

10 11:20:1 before he's going to answer a

11 11:20:1 question like that, he is going to

12 11:20:1 have to read the entire act. If

13 11:20:2 you want him to do it we'll do it.

14 11:20:23 It's your time. But I'm just

15 11:20:2 making clear that that's what we

16 11:20:2 will have to do to be able to

17 11:20:2 answer that question.

18 11:20:2 MR. O'NEILL: I understand.

19 11:20:2 We will get back to that in a

20 11:20:3 minute. I do want him to do that

21 11:20:32 but we will get back to that.

22 11:20:3 MR. WAXMAN: Okay.

23 11:20:35 Q. Let me go on. Now, other than

24 11:20:3your lawyer, have you discussed the issue

25 11:20:42of possibility of a fraudulent preference


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2 11:20:4with any other person, with Mr.

311:20:4

Richardson or any other person in KPMG

4 11:20:5other than your lawyer?

5 11:20:53 MR. WAXMAN: And you can

6 11:20:5 answer that question yes or no.

7 11:20:5 A. Yes.

8 11:20:5 Q. And what was the nature of

9 11:21:0that discussion?

10 11:21:0 MR. WAXMAN: All right. In

11 11:21:0 answering that question, if what

12 11:21:03 you're doing is communicating the

13 11:21:0 advice that you received from

14 11:21:0 counsel to other people at KPMG who

15 11:21:1 are working with you in your

16 11:21:1 capacity as special liquidator,

17 11:21:1 then I would instruct you to

18 11:21:1 exclude from your answer any

19 11:21:2 conversation of the legal advice

20 11:21:22 that was given by the lawyers.

21 11:21:23 If you had a conversation with

22 11:21:25 someone at KPMG on that topic that

23 11:21:2 did not involve the advice of

24 11:21:32 counsel, then please answer the

25 11:21:33 question.


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2 11:21:35 MR. ZACK: Wait a minute. I'm

311:21:3

not sure that's a proper ruling. I

4 11:21:4 believe --

5 11:21:42 MR. WAXMAN: Well, wait a

6 11:21:43 second, who are you?

7 11:21:4 MR. O'NEILL: This is Leonard

8 11:21:45 Zack, he's my associate.

9 11:21:4 MR. ZACK: I'm Leonard Zack.

10 11:21:4 MR. WAXMAN: All right.

11 11:21:4 MR. ZACK: It's my

12 11:21:5 understanding that the law of

13 11:21:53 attorney-client privilege runs from

14 11:21:5 a lawyer to you or whoever it is.

15 11:22:0 But that does not preclude him from

16 11:22:03 saying to a stranger on the street

17 11:22:0 I've been told that such and such

18 11:22:0 is the law.

19 11:22:1 MR. WAXMAN: Okay, that was

20 11:22:12 not the question. So first of all,

21 11:22:13 we will have one person speaking at

22 11:22:15 a time. So one of you can take the

23 11:22:1 deposition and the other can't.

24 11:22:1 But the question as I understood it

25 11:22:2 was did you talk to anyone at KPMG.


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2 11:22:2 Therefore the privilege --

311:22:25

MR. O'NEILL: No, I said did

4 11:22:2 you talk to anyone at KPMG or

5 11:22:2 otherwise regarding the fraudulent

6 11:22:3 preference.

7 11:22:32 MR. WAXMAN: Okay. He

8 11:22:33 answered with respect to KPMG.

9 11:22:3 Q. Did you talk to anyone at KPMG

10 11:22:3or otherwise with respect to the

11 11:22:3fraudulent preference?

12 11:22:3 MR. WAXMAN: Okay, but it's a

13 11:22:4 compound question so take it one at

14 11:22:4 a time because he said yes to KPMG.

15 11:22:4 Q. Did you talk to anyone else?

16 11:22:4 A. No.

17 11:22:4 Q. And whom did you talk to at

18 11:22:4KPMG?

19 11:22:52 A. I spoke with Mr. Richardson.

20 11:22:5 Q. And what was the nature of

21 11:23:0that conversation?

22 11:23:0 MR. WAXMAN: Again, exclude

23 11:23:03 from your answer any communication

24 11:23:0 to Mr. Richardson that involves the

25 11:23:0 advice you received from counsel or


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2 11:23:1 anything you and Mr. Richardson

311:23:1

might then ask counsel.

4 11:23:1 A. That is what I discussed with

5 11:23:1Mr. Richardson.

6 11:23:2 MR. WAXMAN: On that basis

7 11:23:2 I'll instruct you not to answer.

8 11:23:2 (Instruction not to answer.)

9 11:23:25 MR. O'NEILL: I don't think

10 11:23:2 that that's -- I do not believe

11 11:23:2 that's the appropriate standard.

12 11:23:2 It's not.

13 11:23:3 MR. WAXMAN: That would be

14 11:23:3 news to anyone practicing law. So

15 11:23:3 --

16 11:23:3 MR. O'NEILL: I think

17 11:23:35 discussions with a third party are

18 11:23:3 not subject to the privilege.

19 11:23:3 MR. WAXMAN: He's not a third

20 11:23:4 party. That's the problem with

21 11:23:42 what you're suggesting. He is not

22 11:23:4 a third party. He is working with

23 11:23:4 him in his capacity as special

24 11:23:4 liquidator. Therefore, the

25 11:23:5 privilege applies. You can


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2 11:23:5 challenge that if you want.

311:23:53

MR. O'NEILL: I challenge it.

4 11:23:5 I don't believe the challenge

5 11:23:55 applies.

6 11:23:55 MR. WAXMAN: You'll be

7 11:23:5 disappointed in your challenge.

8 11:23:5 MR. O'NEILL: Maybe, but I

9 11:23:5 challenge it.

10 11:23:5 MR. ZACK: We can do it with

11 11:24:0 the same phone call.

12 11:24:0 Q. How often do you communicate

13 11:24:0with the Department of Finance?

14 11:24:1 A. We have a weekly meeting and

15 11:24:23there are other occasions where I would

16 11:24:2have telephone calls at different times

17 11:24:2during the week.

18 11:24:3 Q. How many telephone calls, how

19 11:24:33many discussions, ten times a day? Can

20 11:24:3you give a number?

21 11:24:3 MR. WAXMAN: Don't guess,

22 11:24:3 don't speculate. If you can give

23 11:24:4 an estimate.

24 11:24:4 Q. Well tell me.

25 11:24:42 MR. WAXMAN: He's not going to


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2 11:24:43 tell you if he's guessing or

311:24:4

speculating. If you can give a

4 11:24:4 reasonable estimate, please do so.

5 11:24:4 A. Last week, for example, one.

6 11:24:5 Q. And what is the topic of these

7 11:24:53telephone calls?

8 11:24:5 A. It can vary from last week I

9 11:25:0was arranging the time of our weekly

10 11:25:03meeting.

11 11:25:03 Q. And what is the purpose of

12 11:25:0this weekly meeting?

13 11:25:0 A. Purpose is to provide an

14 11:25:12update as to any material developments

15 11:25:1that may have occurred in the previous

16 11:25:1week.

17 11:25:2 Q. Have you ever, other than the

18 11:25:2directives that you, the three directives

19 11:25:2that you mentioned --

20 11:25:2 MR. WAXMAN: Do you mean

21 11:25:3 ministerial instructions?

22 11:25:33 MR. O'NEILL: Ministerial

23 11:25:33 instructions.

24 11:25:3 Q. -- been advised, requested or

25 11:25:3instructed in any way by anyone in the


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2 11:25:42Department of Finance in the carrying out

311:25:4

of your activities?

4 11:25:4 A. The Department of Finance are

5 11:25:4very clear and are clear in all

6 11:25:52communications that myself and Mr.

7 11:25:53Richardson act independently as

8 11:25:5liquidators. And on the only occasions

9 11:26:0where there is direct instructions

10 11:26:05through the ministerial instructions.

11 11:26:0 Q. Can you answer yes or no?

12 11:26:1Have you ever been instructed, advised or

13 11:26:1directed by anyone in the Department of

14 11:26:1Finance to act in a particular way, other

15 11:26:1than the ministerial instructions?

16 11:26:23 A. No.

17 11:26:2 Q. Who pays KPMG for the work?

18 11:26:4 A. IBRC in special liquidation.

19 11:26:4 Q. And who approves the invoices?

20 11:27:0 MR. WAXMAN: I'll object to

21 11:27:0 lacks foundation based on the

22 11:27:0 witness's puzzlement.

23 11:27:12 A. I'm not sure anyone

24 11:27:1necessarily approves them.

25 11:27:1 Q. You pay yourself?


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2 11:27:1 A. They're paid out of the

311:27:2

company in liquidation, yes.

4 11:27:22 Q. So the invoices are --

5 11:27:2 A. They will eventually be

6 11:27:2approved.

7 11:27:2 Q. By?

8 11:27:3 A. By the creditors.

9 11:27:32 Q. Does the Department of Finance

10 11:27:33review the invoices or the payments?

11 11:27:3 A. They see them.

12 11:27:4 Q. Do they have the power to

13 11:27:42approve or disapprove them?

14 11:27:5 A. They probably have the power

15 11:27:5but they do not.

16 11:27:5 Q. Has the Department of Finance

17 11:28:0or anyone in the Department of Finance

18 11:28:03ever questioned a KPMG invoice?

19 11:28:0 A. No.


21 11:28:0 You may answer.

22 11:28:0 A. No.

23 11:28:1 Q. Is it true that you advised

24 11:28:33the Minister of Finance that the terms of

25 11:28:35the request for proposals for the bids on


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2 11:28:4the IBRC loan book was confidential?

311:28:4

MR. WAXMAN: Vague.

4 11:28:4 A. Could you rephrase that

5 11:28:4question, please.

6 11:28:4 Q. Okay. Did you advise the

7 11:28:5Department of Finance that the terms of

8 11:28:5the request for proposals that was sent

9 11:29:02out to bidders on the KPMG -- sorry, the

10 11:29:0IBRC loan book should be kept

11 11:29:1confidential?

12 11:29:1 A. No.

13 11:29:15 Q. Were the terms of that request

14 11:29:2for proposals made public?

15 11:29:2 A. No.

16 11:29:2 Q. Who made the decision not to

17 11:29:2make it public?

18 11:29:2 A. Myself and Mr. Richardson.

19 11:29:2 Q. Why?

20 11:29:3 A. Because we want to keep the

21 11:29:3process and parameters around it

22 11:29:4confidential.

23 11:29:4 Q. Would the sale of assets in a

24 11:29:52standard liquidation be kept confidential

25 11:29:5in the same way?


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2 11:29:5 A. Yes.

311:30:0

Q. Are there any differences

4 11:30:0between the ministerial instructions on

5 11:30:15the 10th of May and the 20th of July as

6 11:30:1to the valuation method for IBRC's assets

7 11:30:23and the method you would have applied in

8 11:30:25a, quote, normal liquidation?

9 11:30:3 A. I think I need to see the, the

10 11:30:32documents.

11 11:30:32 Q. The ministerial instruction?

12 11:30:3 A. To refresh my mind.

13 11:30:3 Q. Okay. I'm happy to get one of

14 11:30:3those. I don't have that with me.

15 11:31:0 Now, the minister has stated

16 11:31:15that the liquidation process will not

17 11:31:22sell the assets in a fire sale. Do you

18 11:31:2agree with that statement, that the

19 11:31:2minister has said so in several public

20 11:31:2statements?

21 11:31:2 MR. WAXMAN: I'm sorry, is the

22 11:31:3 question is he aware that the

23 11:31:3 minister has made those statements?

24 11:31:33 MR. O'NEILL: Is he aware,

25 11:31:3 yes.


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2 11:31:3 A. Yes.

311:31:3

Q. Are you aware what is going to

4 11:31:3happen to the assets that you have not

5 11:31:3managed to sell at the termination of the

6 11:31:4liquidation of IBRC?

7 11:31:43 A. Yes.

8 11:31:4 Q. And what is going to happen to

9 11:31:45those assets?

10 11:31:4 A. They will transfer to NAMA at

11 11:31:4the reserve price.

12 11:31:5 Q. And who will set that price?

13 11:31:5 A. Our independent valuers.

14 11:31:5 Q. So they will transfer it, the

15 11:31:5value price set out by the independent

16 11:32:0valuers?

17 11:32:02 A. Correct.

18 11:32:02 Q. In your knowledge, does the

19 11:32:0minister have the value to set the price

20 11:32:0that those assets will transfer to NAMA?

21 11:32:1 A. No.

22 11:32:1 Q. No, to your knowledge or no,

23 11:32:13he does not?

24 11:32:1 A. No to both.

25 11:32:1 Q. Is there any agreement between


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2 11:32:33IBRC, the special liquidators and NAMA

311:32:35

relating to the security that NAMA holds

4 11:32:3over the IBRC assets?

5 11:32:4 A. I believe there is, yes.

6 11:32:5 Q. Can you enlighten me on the

7 11:33:0terms of that agreement?

8 11:33:05 A. No, I can't.

9 11:33:0 Q. Do you know who negotiated

10 11:33:0that agreement?

11 11:33:1 A. I don't think necessarily

12 11:33:1there was any negotiation on the

13 11:33:1agreement. I think there was a, my

14 11:33:22recollection is that there is a

15 11:33:2correspondence in place with respect to

16 11:33:2the security that exists and any advances

17 11:33:3that NAMA would provide to us under the

18 11:33:3agreed facility that NAMA put in place to

19 11:33:3help us fund the liquidation should we

20 11:33:3require that funding.

21 11:33:4 Q. We presented an agreement, a

22 11:33:4draft of an agreement that was apparently

23 11:33:5never signed and was objected to by

24 11:33:5yourselves and stipulated that it had

25 11:33:5never been signed. The agreement that


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2 11:34:0does exist, can you tell me, is it

311:34:0

similar to that agreement, is it the same

4 11:34:1agreement, has it now been signed?

5 11:34:12 MR. WAXMAN: Do you want to

6 11:34:13 put the document in front of him?

7 11:34:2 Q. Have you had any discussions

8 11:34:4with the Department of Finance regarding

9 11:34:4the challenge to the promissory notes

10 11:34:5instituted by David Hall?

11 11:35:15 A. Yes.

12 11:35:15 Q. And what was the substance of

13 11:35:1those discussions?

14 11:35:1 A. I have asked how they thought

15 11:35:2the court case went.

16 11:35:2 Q. And that's it?

17 11:35:2 A. Yes. I should say for the

18 11:35:3record I do know Dave Hall.

19 11:35:4 Q. Okay. How many -- do you

20 11:35:43recall how many applications KPMG has

21 11:35:4made to the High Court so far relating to

22 11:35:5this liquidation?

23 11:35:55 A. No.

24 11:35:55 Q. Are those applications public?

25 11:36:05 A. They're on the record.


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2 11:36:0 Q. On which record?

311:36:0

A. On the court record.

4 11:36:0 Q. The court record is not

5 11:36:12public.

6 11:36:1 A. I think any cases in which we

7 11:36:15would be taking an action would be

8 11:36:1public, if they're listed on the court

9 11:36:2diary which is available in the court's

10 11:36:2website in Ireland.

11 11:36:25 Q. I have a list of applications

12 11:36:2here and none of them are public.

13 11:36:3Application 2013-300S, are you familiar

14 11:36:3with that application made on the 14th of

15 11:36:3July, 2013?

16 11:36:3 A. No.

17 11:36:4 Q. Application 2013-474S on the

18 11:36:418th of October, 2013?

19 11:36:4 A. No.


21 11:36:5518th of October?

22 11:36:5 A. No.


24 11:37:0318th of October?

25 11:37:05 A. No.


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2 11:37:05 Q. On the same day, 2013-477S and

311:37:1

2013-478S?

4 11:37:1 A. Not under the numbers you're

5 11:37:15describing, no.

6 11:37:1 Q. Are you aware of any

7 11:37:1applications to the High Court on the

8 11:37:218th of October by the special

9 11:37:2liquidators?

10 11:37:3 A. No.

11 11:37:3 Q. Who would make applications on

12 11:37:35your behalf?

13 11:37:3 A. My, my legal team.

14 11:37:3 Q. Without your knowledge?

15 11:37:4 A. No, I would have knowledge.

16 11:37:45There are also applications that would be

17 11:37:4made, in certain circumstances, by the

18 11:37:4legal team in IBRC with relation to IBRC

19 11:37:5matters, some of which I would be aware

20 11:37:5of, some of which I would not.

21 11:37:55 Q. What would be the applications

22 11:38:0you are aware of?

23 11:38:0 A. They would be applications in

24 11:38:03relation to ongoing pieces of litigation

25 11:38:0involving IBRC.


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1 KIERAN WALLACE

2 11:38:0 Q. To the High Court?

311:38:1

transcript kieran wallace ibrc delaware chapter 15, 04.11.2013

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