The high profile liquidation of Custom House Capital Limited (In Liquidation) continued in 2012. Following a successful exercise to reconcile and confirm the position regarding certain client assets, the liquidator of the company proposed applying a fee of 0.5% when transferring the assets to clients to cover the costs of the reconciliation exercise.
Following objections by some clients, the liquidator issued a motion seeking approval of the proposed fee by the High Court. The motion was objected to by a small number of clients. The Court found that the liquidator was obliged to arrange for the orderly distribution of client assets and had acted correctly in seeking to reconcile the clients’ accounts prior to distributing the assets, particularly given the level of fraud reported in the company. However, it held that the only jurisdiction it could exercise to permit recourse to client assets arose under statute. The Court noted that the relevant statutory provisions, which had not been the primary basis of the application, required that the general assets of the firm be exhausted prior to relying on those provisions.
The Court was not satisfied that the assets had been so exhausted and ruled that the assets should be transferred to the clients without the application of the charge.
In re Custom House Capital Ltd (In Liquidation)  IEHC 382