Court bid to alter MMI liquidation

THE Dublin and London Stock Exchanges are to present a motion in the High Court on Monday to seek a special "default" procedure, allowed under British law, to apply in the case of the MMI liquidation.

Under this procedure, a special officer appointed to the company puts parties involved on each side of uncompleted share deals in touch with each other, allowing debts due at the time of the liquidation to be settled.

If this happens in the case of MMI, the liquidation will be transformed as the main asset of the liquidated broker, its debtors, are effectively people who owe money to counterparties (the people selling the shares) in London - mainly K&H Options, Credit Suisse and Merill Lynch.

If the default procedure is given the go ahead by the court, the money owed by MMI clients - or as much as can be collected - will be paid directly to counterparties.

The other option open to the court would be to allow the normal liquidation process to continue and for the liquidator to collect as much of the money owed as possible. However the counterparties in London would then have to take their chance alongside other creditors, likely to include trade creditors and possibly the Revenue Commissioners.

MMI owes a total of £14 million - mainly to the three London brokers - and had debtors believed to owe roughly the same. The stock exchanges' motion will be heard after the petition to appoint Mr Tom Kavanagh, provisional liquidator, as the liquidator, is heard by the court. The outcome will be closely watched. The two stock exchanges split in 1995 and there is no provision in Irish law for a default process - which is enshrined in 1989 legislation in the UK.