Liquidator agrees terms with former directors of bank

A CONDITIONAL settlement by the liquidator appointed to Merchant Banking Ltd in proceedings against two former executive directors, Mr Patrick Gallagher and Mr John Cousins, had been agreed, the High Court was told yesterday.

The President of the High Court, Mr Justice Costello, said he was agreeing the settlement entered into by the liquidator and was making it a rule of court, which meant that Mr Gallagher would have to pay a sum of money.

Documents and the sums involved were not opened in court. ,Mr Gallagher had formerly been old with the Gallagher Group. In the original proceedings Mr Cousins was described as a Dublin chartered accountant.

Merchant Banking Ltd collapsed in April 1982 with losses of £3 million and debts of over £30 million. Some 590 small investors were owed £1.3 million. The original liquidator was Mr Paddy Shortall and the appointment was taken over by Mr Peter, Fitzpatrick.

In 1992, Mr Fitzpatrick called on the two directors to admit liability and stated that, in the absence of any satisfactory response, he proposed that proceedings should be served immediately. The liquidator had alleged fraudulent trading against Mr Gallagher.

The High Court case which was listed for hearing for next week would have sought to make the two directors personally liable for debts.

In September 1991, the DPP decided not to take civil proceedings against Mr Gallagher. He had served 12 months of a two year sentence in Magilligan prison, Co Derry, after being convicted on a series of fraud charges following the £3.5 million collapse of Belfast Merchant Banking.

Yesterday, Mr Ian Finlay SC, for the liquidator, told Mr Justice Costello that he was looking for directions regarding a conditional settlement in the proceedings against Mr Gallagher and Mr Cousins which was entered into on Thursday last.

The application was based on an opinion of counsel relating to the conditional settlement.

Alter reading the Opinion, Mr Justice Costello said that it seemed this was a reasonable compromise in the circumstances.

The judge said that the proceedings could go through on the company law side. He was now agreeing this settlement being entered into by the liquidator.

He said he was making it a rule of court and that meant that Mr Gallagher would be ordered to pay the sum. He would approve this.