Legislation aimed at addressing the ongoing disruption to the Irish economy, and the compelling need to make credit more available, has been enacted. The Credit Institutions (Stabilisation) Act 2010 sets out various measures which will allow the reorganisation and restructuring of credit institutions in Ireland as envisaged by the National Recovery Plan 2011-2014 and the EU/IMF Programme of Financial Support for Ireland.

Some of the major provisions of the Act are as follows:

• Scope – the Act will apply to licensed banks, building societies and credit unions that have already received or are to receive financial support from the Minister for Finance. The Minister may also provide that the Act will apply to any other person having a place of business in Ireland or any individual resident in Ireland to whom an asset or liability of a relevant institution is transferred.
• Duration – the majority of the provisions of the Act are to cease to apply on 31 December 2012. Any order made under the Act will however continue to have effect according to its terms.
• Direction Order – the Minister may make a “direction order” to a relevant institution in which the Minister may direct such an institution to do or to refrain from doing a particular action.
• Special Management Order – the Minister is empowered to make a “special management order” under which the Minister may appoint an appropriate special manager to the relevant institution to take over the management of its business to preserve and restore its financial position.
• Subordinated Liabilities Order – the Minister may make a “subordinated liabilities order” in respect of the liabilities of any relevant institution which has received financial support from the State.  Specifications can include modifying rights to repayment of principal, repayment of interest, events of default, timing of obligations, etc. Such an order must have the purpose of preserving or restoring that institution’s financial position.
• Transfer Order – the Minister is empowered to make a “transfer order” in respect of the assets and/or liabilities of a relevant institution, under which the Minister may, despite any law or agreement to the contrary, transfer the assets and liabilities of a relevant institution to a third party, on the terms and conditions set out in such order. There are separate provisions for foreign assets and liabilities.
• Directors’ duties – the Act provides for a number of additional duties for directors in a relevant institution to facilitate the availability of credit in Ireland, protect the interests of taxpayers and restore confidence in the banking sector.
• Effect of Act on other obligations – if the Act triggers consequences, such as an event of default under underlying loan documentation or other agreements involving a relevant institution, these consequences will not occur purely because of its enactment.

In the same week that the legislation came into force, the government secured a High Court order under its provisions allowing it to inject a further €3.7 billion of state funds into AIB, effectively nationalising the bank, in an effort to restore eroded consumer confidence.