Unclaimed Custom House Capital money to be controlled by State

The High Court has ordered that the State is to have control of unclaimed money from the Custom House Capital (CHC) liquidation.

If future claims materialise applications can be made to the court to have them paid out.

The investment firm collapsed in 2011, and liquidator Kieran Wallace found €61 million in client funds had been misappropriated. Some €41 million was recovered, and by March 2023 €39 million had been reimbursed to clients.

On Thursday Mr Justice Brian O’Moore said he was satisfied that a provision of the Companies Act 2014 could be used for the distribution of the unclaimed funds whereby they will be held in an account controlled by the Minister for Finance and after seven years will be transferred to the Exchequer. Any claims that then arise, whether within the seven-year period or afterwards, will be dealt with by the claimant applying to the court seeking they be paid.

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The judge was giving his decision on an application by the liquidator on how he should deal with recovered misappropriated monies and pooled client assets, or “rump” monies, which remain undistributed and undistributable at the conclusion of the liquidation.

The judge said there were a number of reasons why such monies will be impossible to distribute. For instance, he said the official liquidator had identified the fact that in some cases no contact can be made with some clients, while others have not engaged sufficiently for the purpose of receiving monies due to them.

The judge said this created a very real difficulty for the liquidator who is anxious that the liquidation be concluded as early as can practicably be done.

In previous judgments in this liquidation the court had on a number of occasions emphasised the obligation on the liquidator to distribute funds and assets to the persons entitled to them, the judge said,

The liquidator had proposed four possible solutions to dealing with the rump monies and assets, including keeping the liquidation open and continuing to try to contact clients who had not responded. It was also suggested that a trust could be set up to distribute the monies or they could just be distributed proportionately among those clients who had engaged and already been paid.

The judge said it would be “intolerable” to allow the liquidation to remain open; the liquidation process had already cost €825,400 over 10 years.

The trust option was also costly with an estimate of €235,000 for just maintaining a trust for 10 years if, for example, the amount of money to be put into the fund was €2 million.

The option of “giving away one investor’s money to another investor” was difficult to justify, he said. The liquidator had also identified a lack of any legislative basis for such action.

To the liquidator’s credit, the judge said, he preferred the statutory option (under the Companies Act of putting the monies under the control of the Exchequer). This also avoided the costs associated with the other options.

The judge made an order that all undistributed monies of former CHC clients, on hand or under the control of the liquidator, should be lodged in accordance with section 623 (1) of the Companies Act 2014.