Timeline of events
- Below is a timeline of events which sets out the key milestones that have occurred since BES entered resolution. The timeline covers key events relevant to (1) BES's resolution, (2) the Novo Banco sale process, (3) the No Creditor Worse Off report and (4) the Administrative Appeal.
- The Bank Recovery and Resolution Directive ("BRRD") establishes a regime for the recovery and resolution of credit institutions and investment firms. Bando de Portugal, acting as resolution authority, resolved to enter BES into resolution on 4 August 2014. At the same time, Banco de Portugal resolved to utilise the 'bridge bank' tool to establish a new bank, Novo Banco. Banco de Portugal transferred certain assets and liabilities from BES to Novo Banco, and at that time included a general statement in the resolution instrument stating that it had the ability to re-transfer assets and liabilities back to BES. However, the BRRD requires that "the possibility that the specific shares or other instruments of ownership, assets, rights or liabilities might be transferred back" should be expressly set out in the instrument of resolution. On 29 December 2015, contrary to the requirements of the BRRD, Banco de Portugal retransferred certain notes from Novo Banco to BES (the "Retransfer Decision").
- Under the BRRD regime the creation of a bridge bank is intended to be an interim solution. The BRRD provides that a bridge bank must be operated with a view to maintaining access to critical functions and for it to be sold to one or more private sector purchasers when conditions are appropriate. Banco de Portugal conducted two separate sales processes for Novo Banco. 75% of the share capital in Novo Banco was ultimately sold to Lone Star on 18 October 2017.
- The BRRD regime requires that no shareholder or creditor will be left worse off after the use of resolution tools than they would have been had the whole entity been placed into an insolvency proceeding. A ‘no creditor worse off’ ("NCWO") valuation of the entity at the point of resolution is prepared by an independent valuer in order to check whether any shareholders or creditors have received less from the resolution than they would have recovered from an insolvency. Where there is a shortfall, shareholders and/or creditors are entitled to compensation to close the gap. Banco de Portugal instructed Deloitte to conduct a valuation of BES and prepare a NCWO report. The Noteholder Group has requested a copy of the report in order to consider and evaluate the valuation. Banco de Portugal has to date, and contrary to court orders, failed to provide an unredacted version of the NCWO report. A copy of the redacted NCWO and copies of the executive summary to that report can be found here.
- The Noteholder Group filed an Administrative Appeal on 1 April 2016. This appeal challenges the legality of the Retransfer Decision in the Portuguese courts. In the context of the Administrative Appeal the Noteholder Group requested a copy of Banco de Portugal's 'administrative file' which the Noteholder Group had expected would include papers documenting Banco de Portugal's detailed decision making process; a process which led to the retransfer of approximately €2.2 billion of bonds from Novo Banco to BES. The entire content of the administrative file can be found here.