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Liquidators admit charging for error of own making in Treasury Holdings wind down

‘Simply human nature not to be as careful with other people’s money, as one’s own,’ says judge

Michael McAteer (left) and Paul McCann, who were appointed liquidators of developer Treasury Holdings at the behest of Nama. File photograph: David Sleator/The Irish Times

Fri Nov 25 2022 - 16:14

Two high-profile liquidators admitted overcharging some €8,500 in fees to correct an error of their own making when seeking approval of their fees of €290,395 and lawyers’ costs of €38,670, the High Court has heard.

The overcharging emerged when clarity was sought about the fees by Mr Justice Michael Twomey from Michael McAteer and Paul McCann, of Grant Thornton, as liquidators of Treasury Holdings.

The judge said while he was making no criticism of the liquidators, he said it was “simply human nature not to be as careful with other people’s money, as one’s own”.

In this case, the liquidators were appointed in 2012 by the National Asset Management Agency (Nama) over the Johnny Ronan-Richard Barrett Treasury development company. Therefore the source of their fees and costs was the taxpayer because Nama, as the main creditor, is a State agency, the judge said.

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Over the years since, the liquidators performed their task of realising as much of Treasury’s assets for its creditors and part of their duties was to make various filings with the Companies Office. However, it was discovered that three solvent Treasury subsidiaries had been included in the filing of Companies Office forms, known as E4s, which provide a statement about the position of the winding up of a company.

Last month, Mr McAteer, managing partner at Grant Thornton, and Mr McCann, a former managing partner, applied to the court to file 14 amended E4 forms dating back seven years in order to correct this error.

The liquidators, in a sworn statement, told the court that creditors of Treasury had “not been impacted, and there is no change to the expected return for creditors”.

However, the judge sought to satisfy himself of this because he said he could find no reference to it in the liquidators’ application for approval of remuneration and legal costs. The judge made it clear he did not think the court should approve liquidator fees/costs which included a cost for correcting errors that had been made by the liquidators.

He adjourned the matter so it could be clarified. He noted Nama, as the largest creditor, had already agreed to the liquidators’ remuneration and legal costs.

When the case returned before him earlier this month, he said the liquidators “to their credit” confirmed €8,536 had been included in the original fees and costs which “was attributable to their own mistake”.

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In a judgment on the matter, the judge said that, as a result of this, the liquidators reduced their own fees by €4,747 (bringing their bill down to €285,648) and the legal costs by €3,788 (bringing these down to €34,882).

The oversight of this by the liquidators and the failure by Nama to pick it up appeared to the court to be “a reflection of human nature in two ways”, the judge said. First, it illustrated that a person who is charging a fee — the liquidator in this instance — is unlikely to be as careful about checking the accuracy of that fee compared to someone paying for it out of their own pocket. Second, it illustrated that a person who is paying a fee out of his own pocket is more likely to be concerned about its accuracy, than if a State agency — in this case Nama — is paying it and where the taxpayer ultimately foots the bill.

These matters show the importance of the courts “being always alert to the interests of the taxpayer”, he said. While State agencies are represented in court, the taxpayer is never represented though the taxpayer is often footing the bill, he said.

The judge approved the remuneration and legal costs bill in the reduced amounts.

He stressed the court has an important role in overseeing any fees because of the “unavoidable conflict” between the liquidators’ own interests in deciding which work to do in the liquidation and the interests of creditors whose return will be reduced by the remuneration for the liquidation.

State agencies can also ensure that money coming out of taxpayers’ funds is subject to the same scrutiny, as it would be if it was coming out of an individual’s pocket, he added.

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