Liquidator to return €130m to Custom House Capital clients

Around €130 million is to be returned to clients of Custom House Capital (CHC), the collapsed broker found to have misappropriated €66.5 million of investors' funds.

CHC's liquidator, Kieran Wallace of KPMG, is due to ask the High Court for directions on how to return funds to clients of the defunct investment firm and on how best to pay for that.

It is understood that the total figure involved is about €130 million, but some of the costs of returning money to clients will come out of that total. This is one of the reasons the liquidator is seeking the court’s guidance.

The Irish Times has published a formal notice from Mr Wallace stating that he applied to the High Court this week for direction on how to distribute remaining client assets held by or on behalf of the company. He is also seeking directions on "the manner in which misappropriated monies recovered by the official liquidator are to be distributed".

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The method approved by the court will determine the final cost of the redistribution. An initial hearing on March 15th will deal with issues such as who should be told of the application and how the court should deal with interested parties.

The notice advises clients to contact BCWM, the investment firm the liquidator agreed should handle CHC investors’ funds when he was appointed. CHC had hired BCWM at that point, but Mr Wallace continued the arrangement for the sake of continuity.

‘Deliberate misuse’

CHC was liquidated in 2011 after a High Court-ordered investigation by two Central Bank inspectors found "systemic and deliberate misuse" of clients' money, the majority of which represented transfers to syndicated property investments. Mr Wallace subsequently sought the disqualification of its directors.

As a result, in December the High Court handed down the longest disqualification in the history of Irish company law to former CHC chief executive, Harry Cassidy. He was disqualified from acting as a company director for 14 years.

Investment director John Whyte received a 10-year disqualification while non-executive director John Mulholland was banned for 12 years.

Mr Justice David Keane said the conduct of all three was "deeply dishonest, continued over a protracted period of time until, for a variety of reasons, it could no longer be concealed".

None of the directors challenged the findings of the Central Bank report and Mr Cassidy did not contest the liquidator's application. Mr Mulholland accepted that he failed in his responsibility and Mr Whye opposed the application.