David Drumm, the former chief executive of the troubled Anglo Irish Bank, has filed for bankruptcy in the United States.
The bank is due to begin legal action on 26 October in a bid to recover 8m euros it claims it is owed by Mr Drumm.
On 8 October Anglo Irish rejected a settlement offered by the former chief executive.
The offer included all of his personal assets with the exception of his clothes and jewellery.
It even included his pension rights and accruements
Mr Drumm, who now lives in Cape Cod, Massachusetts, filed a voluntary petition for bankruptcy with a Massachusetts court on Thursday.
The petition allows a court-appointed official to divest all of his assets and dispose of them to repay his creditors.
A lawyer for Anglo Irish said it was an "extraordinary" turn of events.
The bankruptcy application means Mr Drumm's pension is no longer vulnerable to the bank's legal actions.
It is now believed the cost of bailing out Anglo Irish could cost the Irish government between 29.3bn and 34bn euros.