In Re Home Payments Limited (In Liquidation) IEHC 507, an application for directions was made by the Joint Liquidators of Home Payments Limited for the liquidators’ remuneration, costs and expenses to be discharged from customer accounts.  Prior to its liquidation the company had operated as a nationwide household budgeting and bill paying company. 

At the date of the commencement of the winding up, monies were held in a bank account in the name of the company that were deemed to be trust monies in favour of customers.  Such monies were paid into this account by customers of the company for the specific purpose of being used by the company to discharge certain nominated bills on behalf of the customers. 

Finlay Geoghegan J. had to consider whether the work carried out by the Joint Liquidators of the company in relation to the reconciliation, tracing and administration of the customer monies held in the account was work which had been done as part of their overall duty to conduct an orderly and proper winding up of the company. The Court held that the said work was necessary for the orderly and properly winding up of the company in order for the Joint Liquidators to be able to ensure the correct return of customer monies to those beneficially entitled to receive same. 

The Court also considered whether it would be appropriate to exercise its discretion pursuant to Section 244 of the Companies Act 1963 which provides that in the event of the assets being insufficient to satisfy the Company’s liabilities, the Court may make an order as to the payment out of the assets of the costs, charges and expenses incurred in the winding up in such order as the Court thinks just.  As the work which had been carried out by the Joint Liquidators formed part of the orderly and proper winding up of the company, the Court ordered that the assets of the company be applied to discharge the liquidators’ total remuneration, costs and expenses in relation to both company and customer related work in equal priority from the customer accounts.

However, Finlay Geoghegan J. imposed a 5% reduction on all of the Joint Liquidators’ remuneration to date and to anticipated costs as she concluded that there would be additional expenses incurred as the Joint Liquidators were from different firms of accountants giving rise to a certain level of duplication.  Furthermore, as the overall legal fees that were proposed to be charged appeared reasonable, it was held that it was not necessary to remit the costs to taxation as doing so would delay the final distribution of the trust monies to customers and would be unlikely to result in any significant reduction of fees.
Contributed by Zara West.

Key Contacts Fergus Doorly & Zara West