To Appeal or Not to Appeal…
Amantiss Enterprises Limited and Wilbury Limited were placed into creditors’ voluntary liquidation in 1994. Following the appointment of a liquidator, proceedings were issued by the two companies, together with a third company, Framus Limited, against a multitude of defendants including CRH plc, Readymix plc and Kilsaran Concrete Products Limited, alleging breaches of competition law.
The proceedings were ultimately struck out in July 2012 on the grounds of delay, with an order that the defendants recover their costs against Amantiss, Wilbury and Framus. The solicitors for the three companies lodged an appeal against that decision. The appeal was not authorised by the liquidator of Amantiss and Wilbury, who was of the view that an appeal was not in the best interests of their creditors. The defendants to the competition proceedings brought an application to strike out the appeal.
A director of Framus who was also a creditor of the Amantiss and Wilbury, brought an application under section 309 of the Companies Act 1963 seeking a meeting of the creditors to ascertain their wishes regarding the appeal.
An issue arose as to whether the defendants in the competition proceedings, who under the costs order stood as creditors in the liquidation, were entitled to attend and vote at the creditors’ meeting. Laffoy J held that it would “make absolutely no sense” to include the defendants in the competition proceedings in the meetings in circumstances where there was a clear conflict of interest between them and other creditors among the general body of creditors who might oppose the strike out motion.
Re Amantiss Enterprises Limited (In Voluntary Liquidation) and Re Wilbury Limited (In Voluntary Liquidation) IEHC 21
Charge-Out Rates for Liquidators
In two cases decided towards the end of 2012, the High Court applied reductions to the hourly charge out rate of staff members employed by the liquidator who had been promoted during the course of the liquidation.
While other factors were at play in the proceedings, such as delay (Farrell v Plastronix Investments Ltd) and the fact that an estimate had been provided to creditors (In re Haydon Private Clients Ltd), both cases demonstrate a continuation of the principles enunciated in Re Sharmane Limited and Re Missford Limited. In those cases, the High Court emphasised that it would not determine the remuneration payable to a liquidator solely on the basis of hourly charge-out rates, but would also have regard to:
(i) the nature of the work carried out
(ii) the complexity of the work, and
(iii) the importance and value of the work to the client.
In each case the Court reduced the general fees of the liquidator arising due to the foregoing issues and was also critical of the application of higher charge out rates for employees following from a promotion.
The Court acknowledged that liquidators should be able to recover rates which reflect the increased experience, ability and efficiency reflected in a promotion of a staff member. However, it held that in the particular circumstances, taking account of both cost (for the firm) and value (for the “client”, i.e. the creditors), the increased charge-out rates were excessive. In Farrell v Plastronix Investments Ltd, the hourly rates of the staff members in question were reduced by €20-€30 per hour. In In re Haydon Private Clients Ltd, the Court applied a general reduction of €25,000, which also took account of other matters in addition to the increased charge-out rates applied to promoted employees.
Farrell v Plastronix Investments Ltd IEHC 418)
In re Haydon Private Clients Ltd IEHC 505.
Custom House Capital: Exhaustion of Assets and Costs
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
Contributed by: Ruairi Rynn
