Resolution Fund has right to €1.2Bn
Portugal’s Supreme Court of Justice has ruled that the Resolution Fund – set up in 2014 to manage the toxic assets of failed bank Banco Espírito Santo and provide cashflow to the ‘good’ bank created from it – Novobanco – until it got its books balanced — has the right to a €1.2Bn credit from whatever liquid assets can be clawed back from the defunct ‘bad’ bank.
Therefore, the almost €172 million insolvent estate of the institution that has been in liquidation since 2014 will be transferred to the fund.
This means that at this stage of the Resolution Fund’s existence, because it has privileged claims on BES credits, whatever salvageable assets gleaned from the bank will go to the fund rather than BES creditors.
The decision was made public by Banco Espírito Santo on its website and confirmed: “By an agreement from the Supreme Court of Justice, made on July 11, 2023, the credits claimed by the Resolution Fund of €791.7 million, €448.8 million, and €2Bn were recognised as ‘privileged’” meaning the money should go to the Resolution Fund.
The Supreme Court has followed the previous decisions of the Commercial Court (Tribunal do Comércio) and the Supreme Court (Tribunal da Relação) since the start of 2023.
Despite BES not having sufficient funds to compensate all of the credit owed to the Resolution Fund, the possibility of satisfying all the other 5,000 creditors now looks increasingly less likely.