Custom House Capital Limited

Last updated 30th April 2021

On 28 April, the High Court set dates for the submission of further affidavits and the exchange of legal submissions by all parties.  The date of the substantive hearing of the ICCL’s application has been fixed for 20 July 2021.

 

Last updated 22nd April 2021

On 14 April 2021, the High Court (Mr Justice Heslin) extended the date for delivery of replying affidavits from the legitimi contradictores until 21 April 2021.  The proceedings have been listed for mention on 28 April 2021 when it is anticipated that directions will be given regarding next steps, including the exchange of legal submissions.

 

Last updated 05th March 2021

Please note that the Court Order of 9 October 2019 directing the CHC Liquidator, when making any distributions from any of the funds and/or pooled bank accounts comprising assets that form part of the calculation of net loss for eligible investors, to retain an amount of €20,000 from any such distribution, remains in place (see our website update of 7 November 2019). The Administrator has indicated that he is not in a position to certify outstanding claims for compensation pending the determination of the ICCL’s subrogation application.

 

Last updated 23rd February 2021

On 17 February 2021, the High Court (Mr Justice Heslin) directed that all replying affidavits (from the legitimi contradictores and the Administrator) to the ICCL’s application be delivered by 31 March 2021.  The proceedings have been listed for mention on 14 April 2021 when the Court will give directions for the exchange of legal submissions.

 

 

 

 

Last updated 03rd July  2020

THE HIGH COURT

2011 No. 219 MCA

IN THE MATTER OF CUSTOM HOUSE CAPITAL LIMITED (IN LIQUIDATION) 

AND IN THE MATTER OF THE COMPANIES ACTS 1963-2012

ON THE APPLICATION OF THE INVESTOR COMPENSATION COMPANY DAC

 

NOTICE TO CLIENTS OF

CUSTOM HOUSE CAPITAL LIMITED (IN LIQUIDATION)

 

The Investor Compensation Company DAC (the "ICCL") will, on a date to be fixed by the High Court, apply in the above-mentioned proceedings for reliefs to the following effect:-

 

  1. A declaration, pursuant to section 231 of the Companies Acts 1963 to 2012 and/or the inherent jurisdiction of this Honourable Court, that the calculation of net loss under section 30(1) of the Investor Compensation Act 1998 (the “1998 Act”) is to take into account, inter alia, actual recoveries and/or estimated future recoveries of money owed to or belonging to the clients of Custom House Capital Limited (In Liquidation) (“CHC”) which are or ought to be held on their behalf by CHC in connection with the provision of investment business services by CHC and of investment instruments belonging to the clients of CHC which are or ought to be held, administered or managed by CHC for them in connection with the provision of investment business services by CHC, between the commencement of the liquidation of CHC and the delivery of a statement (or, if an interim statement has been delivered, a final statement) to the ICCL specifying the net loss and compensatable loss of an eligible investor.

 

  1. A declaration, pursuant to section 231 of the Companies Acts 1963 to 2012 and/or the inherent jurisdiction of this Honourable Court, that the right of subrogation of the ICCL pursuant to section 35 of the 1998 Act extends to:

 

  1. money owed to or belonging to the clients of CHC and held on their behalf by CHC in connection with the provision of investment business services; and
  2. investment instruments belonging to the clients of CHC and held, administered or managed by CHC for them in connection with the provision of investment business services;

 

that formed or ought to have formed part of the calculation of net loss under section 30(1) of the 1998 Act (“Net Loss Client Assets”).

 

  1. Directions regarding the application of the right of subrogation of the ICCL to Net Loss Client Assets, including:

 

  1. in circumstances where an eligible investor who has received (or will receive) compensation from the ICCL is due distributions in respect of more than one Net Loss Client Asset, directions as to whether the ICCL’s right of subrogation applies equally to each such asset or whether it is allocated between each such asset by reference to the level of loss in respect of each such asset or on any other basis;
  2. directions as to whether the ICCL’s right of subrogation arises in respect of the amount of any overpayment of compensation to an eligible investor arising as a result of the calculation of that eligible investor’s net loss; and
  3. directions as to whether the ICCL’s right of subrogation in respect of the amount of any overpayment of compensation ought to rank in priority to any other claim against distributions of Net Loss Client Assets in the liquidation of CHC by eligible investors and/or the ICCL pursuant to section 35(5A) of the 1998 Act.

 

  1.  An Order, pursuant to section 231 of the Companies Acts 1963 to 2012 and/or the inherent jurisdiction of this   Honourable Court, that, in respect of eligible investors who have applied for compensation under the 1998 Act but   whose claims (or part thereof) have not yet been certified, any distribution of:

 

  1. money owed to or belonging to the clients of CHC and held on their behalf by CHC in connection with the provision of investment business services by CHC; and
  2. investment instruments belonging to the clients of CHC and held, administered or managed by CHC for them in connection with the provision of investment business services by CHC;

 

that have formed, will form or may form part of the calculation of net loss under section 30(1) of 1998 Act shall take account of the right of subrogation of the ICCL.

 

Pursuant to an Order dated 1 July 2020, the High Court appointed Mr Michael Nugent as one legitimus contradictor and Mr Roger Day as another legitimus contradictor to represent the interests of eligible investors in the above-mentioned application (the "Directions Application").

 

Pursuant to the Order dated 1 July 2020, any client of CHC who is an eligible investor under the 1998 Act (an "Eligible Investor") may apply to the High Court on a date to be fixed by the High Court for liberty to appear and be heard at the Directions Application (a "Joinder Application"). Any such Eligible Investor must notify William Fry, solicitors for the ICCL, at chcdirections@williamfry.com (quoting reference 014418.0025.RJR/ROC) by 5:00pm on 31 July 2020 of their intention to make a Joinder Application. 

 

The ICCL shall notify the High Court, Peter Nugent & Co., solicitors for Mr Michael Nugent, Ivor Fitzpatrick & Co., solicitors for Mr Roger Day, and McCann FitzGerald, solicitors for the Official Liquidator, of all such notifications received from Eligible Investors and request the High Court to fix a date for the hearing of any such Joinder Applications which date, once fixed, the ICCL shall notify to any such Eligible Investors.

 

A Joinder Application shall be made by way of motion grounded on an affidavit setting out full particulars of the Eligible Investor’s claim in the liquidation of CHC, full particulars of his/her application for payment under section 34 of the 1998 Act, the reasons why it is necessary and/or appropriate that he/she appear and be heard in addition to the aforementioned legitimi contradictores who have been appointed by the High Court, and any other matters he/she considers appropriate, to be filed in the Central Office of the High Court and served on William Fry, solicitors for the ICCL, McCann FitzGerald, solicitors for the Official Liquidator, Peter Nugent & Co., solicitors for Mr Michael Nugent, and Ivor Fitzpatrick & Co., solicitors for Mr Roger Day, no later than 5 working days before the date to be fixed by the High Court for the hearing of any Joinder Applications.

 

Pursuant to the Order dated 1 July 2020, Eligible Investors may contact William Fry, 2 Grand Canal Square, Dublin 2 at chcdirections@williamfry.com (quoting reference 014418.0025.RJR/ROC) to obtain a copy of the said Order and a redacted copy of the notice of motion and grounding affidavit herein.

 

Dated this 3 July 2020

 

William Fry

Solicitors for the Investor Compensation Company DAC

2 Grand Canal Square

Dublin 2

 

 

 

 

Last updated 08th May 2020

On 30 April 2020, the High Court (Ms Justice Pilkington) decided that the costs of the legitimi contradictores  to the ICCL’s directions application should be borne by the ICCL.   The Court will consider the orders arising from the judgement and the scheduling of the next steps in the ICCL’s application.

 

Last updated 13th March 2020

On 28 February, the High Court heard submissions from the ICCL and the CHC Liquidator as to the apportionment of the costs of the proposed legitimus contradictores to the ICCL’s application for directions in respect of its subrogated claim in the CHC liquidation.  Ms Justice Pilkington reserved her judgement.

 

Last updated 29th January 2020

The count hearing on 22 January 2020 in respect of the ICCL’s subrogated claim in the CHC liquidation was postponed and has been rescheduled to take place on Friday the 28th February 2020.

 

Last updated 13th December 2019

At a hearing in the High Court on 12 December 2019, Ms Justice Pilkington adjourned an application by the ICCL for directions in respect of the ICCL’s subrogated claim in the CHC liquidation until 22 January 2020.  This was to facilitate consideration by the Court of the apportionment of the costs of the proposed legitimus contradictores to the application

 

Last updated 07th November 2019

At a hearing in the High Court on 6 November 2019, the ICCL confirmed that it would proceed with an application for directions from the Court regarding its subrogated claim in the CHC liquidation.  Ms Justice Pilkington extended the order of 9 October 2019, directing the CHC Liquidator, when making any distributions from any of the funds and/or pooled bank accounts comprising assets that form part of the calculation of net loss for eligible investors, to retain an amount of €20,000 from any such distribution. This is to cover the ICCL’s asserted subrogated claim. The matter will come before the Court on 12 December 2019 at which time the central issues regarding the ICCL’s subrogated claim, which require determination by the Court, will be outlined.  The ICCL will also seek at that time, approval from the Judge to appoint a reasonable number of representatives of impacted CHC clients to act as legitimus contradictors to the application. Further updates on the matter will be provided via the ICCL’s website.  

 

Last updated 15th October 2019

At a hearing in the High Court on 9 October 2019, Ms Justice Pilkington directed that the CHC Liquidator, when making any distributions from any of the funds and/or pooled bank accounts comprising assets that form part of the calculation of net loss for eligible investors, shall retain an amount of €20,000 from any such distribution. This is to cover the ICCL’s asserted subrogated claim. The ICCL’s application regarding the scope of its right of subrogation is before the Court on 6 November 2019

 

Last updated 30th August 2019

To date, the ICCL has to date paid out €7.4 million in compensation to eligible clients of CHC who incurred losses, as certified by the Administrator to CHC (Mr. Kieran Wallace of KPMG) who is also appointed as Liquidator.  Certifications in respect of the outstanding claims are awaited from the Administrator.  The ICCL is the largest creditor in the CHC liquidation.

Under investor compensation legislation, where compensation has been paid to an eligible investor of an investment firm, the ICCL “shall be subrogated to the rights of that eligible investor in liquidation proceedings against the investment firm for an amount equal to the amount paid.”

The ICCL and the Liquidator disagree on the scope of subrogation under that legislation.  The ICCL considers that its right to subrogate to the claim of a compensated investor attaches to both CHC company assets and the client assets held by CHC.  On the other hand, the Liquidator contends that the subrogated claim relates only to the company assets and is thus more limited.  Ultimately, this difference in interpretation may require adjudication by the High Court.

On the 8 August 2019, and with a view to progressing matters, the ICCL sought directions from the Court requiring the Liquidator to furnish certain information and that any distributions to clients should be net of an appropriate amount to cover the ICCL’s subrogated claim.  Following that hearing, Ms Justice Pilkington directed that the Liquidator provide the requested information and make limited distributions to CHC clients in advance of a forthcoming Court hearing which is scheduled for 9 October 2019.  

 

Last updated 4th August 2017

On the 26th July 2017 a judgment was delivered by Judge Finlay Geoghegan on the Liquidator’s recent application for the apportionment of costs and the distribution of pooled assets / misappropriated funds. In brief the judgment stated that:-

  • The monies in the pooled bank accounts should be distributed pro-rata to the claim of each client or account holder;
  • All recovered misappropriated monies should be pooled and returned to those accounts from where it originated. Distribution of these funds is to be completed on a pro-rata basis to the total misappropriations from each such account;
  • The Liquidator shall have recourse to recovered misappropriated monies only in relation to his costs for reconciliation, recovery, and distribution of such misappropriated monies.

Further to the above judgment, additional directions were provided by the Court on the 31st July 2017:-

  • An application for the Liquidator’s costs of his recent application should be served on representative parties by the 26th October 2017.
  • A full report and business plan is to be submitted to the Court by Friday the 10th November 2017. This business plan should include:
  1. Details of all client assets distributed by the Liquidator following the above noted judgment;
  2. Details of any client assets not distributed by the date of the report; and
  3. A full explanation and timetable for the distribution of those remaining assets.

For previous updates please click here.

Background

On 21 October 2011, a liquidator was appointed by order of the High Court to Custom House Capital Limited (In Liquidation).

A court ruling was also made under the Investor Compensation Act, 1998 (the Act) that Custom House Capital Limited was unable to meet its obligations and an administrator for the purposes of the Act was appointed. The Liquidator and the Administrator appointed was Mr Kieran Wallace, KPMG.

As Custom House Capital Limited (In Liquidation) is a member of the Investor Compensation Scheme, eligible investors of the firm that incur losses may be entitled to compensation. We will pay clients 90% of the money they have lost, however, the most we pay each investor is €20,000. The ICCL issued claim forms to known clients of Custom House Capital Limited (In Liquidation) on 4 November 2011 and notices were placed in national newspapers in January 2012 inviting all Custom House Capital Limited (In Liquidation) clients to submit claim applications.

Claims will be paid from a Fund that the ICCL has built up over a number of years from contributions paid by the investment industry. The ICCL has provided €19.7 million from its accumulated Reserves to satisfy compensation claims in this case.

The statutory deadline for clients of Custom House Capital Limited (In Liquidation) to apply for compensation under the Investor Compensation Act 1998 passed on 23 March 2012, however clients may, in exceptional circumstances, still apply for compensation (see below).

 

Can I still make a claim for compensation?

  1. The ICCL continue to accept claim application forms, however, claimants are required to include a written reason for the delay when submitting a claim application form to the ICCL.
  2. Please contact the ICCL directly to request a claim application form.
  3. Under the Act, all late claims (i.e. received after the statutory deadline, in the case of CHC - after 23 March 2012) require Central Bank approval to be admitted to the claims process.
  4. The Central Bank of Ireland will have to be satisfied that the claimant was unable to make the claim in advance of the statutory deadline before the claim can be admitted by the ICCL.

 

Where can I get further information on claiming compensation?

Click here to read the ICCL's information booklet for private investors "claiming compensation when an investment firm fails".

 

I am a client of CHC, when can I expect a decision in relation to my claim application?

If you have not received compensation from the ICCL to date, it is most likely because the ICCL is awaiting the certification of your claim from the Administrator, Mr Kieran Wallace of KPMG.  Once the ICCL receive a certification in respect of your claim, we aim to make any compensatable loss payment within 2 weeks.  Unfortunately it is not possible to give an accurate estimate of when individual claims will be resolved.  (Further details are provided below under "Why has my claim not been certified by the Administrator?)

The most recent batch of claim certifications, received from the Administrator, Mr Kieran Wallace were processed and paid in July 2017.

The ICCL will continue to liaise with the Administrator and his team in relation to the next tranches of certified claims. The records and levels of compensatable losses attached to some claims will be easier for the Administrator to establish than others.

 

Why has my claim not been certified by the Administrator?

The Act requires that the Administrator identify eligible clients and assess the level of compensatable losses suffered by each eligible client. In order to establish each client’s losses, the Administrator examines all the client records of the firm, the records relating to the investment instruments held by the firm, the records relating to the transactions and the position of each client.

The Administrator has indicated that the necessary reconciliation process, which is completed by him, in his capacity of Official Liquidator, is protracted due to the poor quality and concern over the accuracy of records within the firm in addition to the complex underlying transactions. Given these circumstances, it is not possible at this stage to give an accurate estimate of when individual claims will be resolved.

Clients of CHC are reminded that the ICCL and KPMG should be notified of any change in contact details in the intervening period.

To date compensation of circa €7.13 million has been paid in respect of 567 claims.

 

I have a query about Custom House Capital Limited (In Liquidation) - who should I contact?

If you have a query on your investments please contact the KPMG Custom House Capital Hotline which is 01 - 4101405 or alternatively, Crowe Horwath (formerly Horwath Bastow Charleton) on 01-6760951.

The Central Bank has published updated Q&A's for clients, which is available from the Central Bank website at Central Bank of Ireland - Update on Custom House Capital.

Queries on the ICCL scheme should be directed to the ICCL.