Bloxham creditors may get 40% of what is owed

Challenge to stock exchange membership revocation may yield extra €6m for broke

The creditors of liquidated stockbroking firm


could get 40 per cent of what they are owed, rather than 10 per cent, if the liquidator wins his challenge to the Irish Stock Exchange’s decision to revoke its membership, the

High Court


has heard.

The firm's largest creditors include National Irish Bank, owed €8.5 million, and the Revenue Commissioners, owed €2.3 million.

Liquidator Kieran Wallace claims the decision of the Irish Stock Exchange Ltd (ISE) to revoke the membership cost Bloxham some €6 million, was not made for proper purposes or for the benefit of the company as a whole, and should be set aside as null and void.

His senior counsel Lyndon MacCann said the revocation had to be seen against the background of "project Chrysalis", under which the ISE was planning to restructure so as to allow corporate members benefit from its €45 million reserves.

The decision to revoke Bloxham’s membership in December 2012, when project Chrysalis was under way, appeared to arise from a view that, if Bloxham could be “got rid of”, there would be “a bigger cake” to be shared among a smaller number of firms, counsel argued.

Several major firms, including NCB Stockbrokers, Goodbody and Davy, stood to benefit from the restructuring, under which it was proposed to distribute some €28 million in excess capital from the reserve capital, the court heard.

The restructuring scheme envisaged rules under which, if any firm was forced out, its shares would be sold at fair value, but the revocation of Bloxham’s membership did not involve any reflection of its interest in the ISE, counsel argued.

Bloxham was one of the oldest members of the London and Irish stock exchanges and had made a significant contribution to the reserves built up from the time the ISE was established in 1995, counsel said.

The ISE was originally intended to be a not-for-profit entity, but the restructuring proposals arose because it had built up some €45 million in reserves, which were not distributable.

ISE management and board were actively engaged in progressing the restructuring throughout 2012 and management had taken the view restructuring was “not just desirable, but essential”, counsel said.

He was opening the challenge by Mr Wallace aimed at overturning the revocation. The case is being heard by Mr Justice Peter Charleton in the Commercial Court and is listed to run for four days.

During his opening, Mr MacCann noted the revocation of Bloxham’s membership arose after the Central Bank had in late May 2012 suspended Bloxham from trading over concerns about its financial position.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times