The High Court refused to consider a new Oaktree offer to KBC Bank in the McInerney examinership, ruling that reopening the matter after judgment would breach the principle of finality.
In an ex tempore ruling delivered on 21 February 2011, Mr Justice Clarke said the offer came after his judgment of 17 February, which maintained the refusal to confirm the proposed scheme of arrangement. The new proposal would give KBC more than €6 million in additional cash, bringing its total payment to the amount it would receive if €50 million were made available to the Banking Syndicate as a whole.
The €50 million figure was the syndicate’s approximate present value for a long-term receivership model. The offer was presented as addressing the court’s conclusion that KBC, the syndicate’s non-participating institution under the NAMA Act, would be unfairly prejudiced by the scheme. The judge had concluded that Bank of Ireland and Anglo Irish would not be unfairly prejudiced, but that the scheme still could not be confirmed because of KBC’s position.
The issue before the court on 21 February was whether it could revisit confirmation in light of the new offer. Clarke said Oaktree was centrally interested in the process because its investment was integral to the scheme and it would own McInerney if the scheme were approved. Although Oaktree was not formally a party, the judge said it had an obligation to put forward its best case at the confirmation hearing if it wanted that to be its final offer.
The judge said KBC’s possible separate prejudice had been raised squarely at the hearing. Oaktree could have indicated then that it might offer further payment if the court found KBC was prejudiced. Instead, the offer came after the court had decided the issue. Clarke said the court was not part of a negotiation in which an interested investor could test an offer, learn the court’s view and then improve it.
He found that Oaktree’s attempt to run the issue again on a different basis amounted to an abuse of process. The court therefore declined to have regard to the new offer and said it would make the orders appropriate in light of the 17 February judgment. The ruling does not set out those orders, and it does not reconsider or confirm the scheme.