The High Court has appointed an examiner to International Securities Trading Corporation plc, which lends capital to banks and is insolvent due to events resulting from the crisis in the financial markets.
Mr Justice Peter Kelly noted yesterday that ISTC's interim examiner, John McStay, shared the view of an independent accountant that ISTC has a reasonable prospect of survival and that extended court protection would be of benefit to the company and its creditors.
ISTC was founded in 2005 by former Anglo Irish Bank executive Tiarnan O'Mahony.
Mr McStay had also reported that he had been contacted by a number of parties who may have an interest in investing in ISTC and had passed on these names, which remained confidential, to the company, the judge said. It was also open to the company to seek refinancing options.
He further noted the company's creditors either supported or were neutral in relation to the directors' petition for examinership. Among those creditors who remain neutral are the Revenue Commissioners.
In those circumstances, the judge said he was "well satisfied" to appoint Mr McStay as examiner to the company, whose investors include some 200 "high net" worth individuals here, and he returned the matter to January 11th next.
When the matter was before the court last month, the judge noted that the alternative to examinership would involve liquidation and a "firesale" of ISTC's assets resulting in a shortfall of some €871 million. ISTC's creditors were "a veritable who's who of the banking world on an international scale", he added.
He noted ISTC's problems arose from the recent downgrading of Structured Investment Vehicles (SIVs) and consequent demands for repayment of those SIV assets.
Because of the recent market turmoil, SIV repayment demands had been made and it was unable to meet those demands. The structuring of its other assets and a default mechanism had lead to further demands in other areas and it was unable to pay its debts.
An independent accountant had prepared a report suggesting that if certain conditions were met, the company or part of it had a reasonable prospect of survival. These included agreement with enough secured creditors to continue trading with ISTC, the company being able to cap its exposure to collateral calls by secured lenders, and the approval of an appropriate scheme of arrangement.
