Custom House Capital clean-up fees hit €1.9m
FEES of €1.9m have been paid so far to the liquidator of Custom House Capital, and the process to clean up the collapsed broker has another two years to run, according to an official Liquidators Account filed to the Companies Office.
The total costs of managing the liquidation stood at €4.3m at April 20, according to the papers filed last week.
Kieran Wallace, an accountant at KPMG, whose other high-profile insolvency work includes as joint special liquidator of the former Anglo Irish Bank, has been winding up Custom House Capital since 2011.
The company was liquidated after a High Court-appointed investigation by two Central Bank inspectors found “systemic and deliberate misuse” of €66m of clients’ money.
Liquidator’s fees of €1.9m are the biggest single cost of the liquidation, the new filing shows, followed by legal fees of €1.228m. VAT on costs – at slightly under €600,000 – is another significant cost.
Costs to date have been covered from €5.57m of funds in the business, but the latest filing shows that the pot had dropped to €1.27m at April 20 last.
The liquidation that began in 2011 is expected to run for two more years, taking it to mid-2020. That is longer than had previously been estimated and reflects the time needed to reconcile and transfer client assets, the filing states.
Last December, the Central Bank confirmed that just 567 of the 2,000 investors who lost money had received compensation from the Investor Compensation Company (ICC), which was established to compensate eligible investors when an investment firm that is authorised here goes bust.
The ICC said it was pressing the liquidator to speed up the certification of claims – which are estimated to total close to €20m for Custom House Capital (CHC) investors – but added that the process was slow.
“The intricacies of the CHC case – which involved the deliberate and organised concealment of the large-scale embezzlement of investors’ funds, coupled with the maintenance of false accounting records and the issuance to clients of incorrect portfolio statements – have undoubtedly contributed to the protracted timespan of the liquidation and the associated claims certification process, which is highly unsatisfactory for the many CHC clients affected,” ICC said in its annual report.
Last year, the High Court ruled that three former directors of Custom House Capital were jointly and severally liable to pay €214,457 to the liquidator to cover the cost of his investigation into the collapsed investment firm, the cost of collection of evidence and the legal fees involved.
At the end of 2016, the High Court had imposed the longest-ever disqualification of a director to Custom House Capital’s former chief executive Harry Cassidy, who was disqualified from acting as a company director for 14 years.
Non-executive director John Mulholland was banned for 12 years and investment director John Whyte received a 10-year disqualification.
Mr Justice David Keane ruled that the conduct of all three was “deeply dishonest, continued over a protracted period of time until, for a variety of reasons, it could no longer be concealed”.
In May, the ‘Irish Times’ reported that Kieran Wallace had selected Davy to manage the return of some client funds, including the assets of a German property fund.
As many as 2,000 clients – mostly pension investors – were affected by the collapse of Custom House Capital.
It had used clients’ money to heavily invest in property, acquiring assets in countries including France, Germany and Switzerland.
But as the financial crisis took hold, Custom House Capital began using client funds to make up shortfalls before the structure came crashing down.