Treasury Holdings ((in Liquidation)) and the Companies Acts 1963 to 2012

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 23 November 2022
• Neutral Citation: [2022] IEHC 643
• Court: High Court
• Docket Number: Record No. 2012/432 COS

In the Matter of Treasury Holdings (In Liquidation)

and

In the Matter of the Companies Acts 1963 – 2012

[2022] IEHC 643

Record No. 2012/432 COS

THE HIGH COURT

COMMERCIAL

JUDGMENT OF Mr. Justice Twomey delivered on the 23 ^rd day of November, 2022

INTRODUCTION

1 . This case deals with an official liquidator's application for approval of his remuneration which was rejected by this Court. The proposed amount of remuneration was rejected because of this Court's concerns that it included payment for the time and costs which were incurred by the liquidator in rectifying his own mistake during the liquidation.

2 . This Court refused to approve the remuneration, even though the primary creditor in the liquidation had agreed the proposed sum. This Court did so, in this instance, because the primary creditor is NAMA, which is taxpayer funded and so if the Court had approved the proposed remuneration, it is the taxpayer who would have been out of pocket.

BACKGROUND

3 . An official liquidator is an officer of the court. In the discharge of her – although in practice it is invariably ‘his’ — duties, a liquidator owes fiduciary duties to the company in liquidation (see Re Dr Developments (Youghal) Ltd [2011] IEHC 307 at para. 20 per Finlay Geoghegan J.).

4 . One of these fiduciary duties is not to profit from the office of liquidator. However, a liquidator and his lawyers have to be paid for their time in winding up the insolvent company. This means that for every euro that is paid to the liquidator and his lawyers, one less euro is available for the creditors of the company.

5 . All of this means that a liquidator, who is occupying this position of trust, is placed in an unavoidable position of conflict between his interests in receiving reasonable remuneration for his work and the interests of the company in liquidation (and so the interests of creditors, who are hoping to receive as much as possible of the debt owed to them from the company).

6 . For this reason, a court plays an important role in approving a liquidator's remuneration.

7 . This important role of the Court is accentuated where the main creditor is a State agency, since, as noted below, the Court must also bear in mind the interests of the taxpayers who are funding that State agency.

8 . This is the background to the application by a liquidator in this case to approve his fees for the period 1 ^st July, 2021 to 30 ^th September, 2022, as well as an application to file amended Forms E4 in the Companies Office.

Error by Liquidators in filing Forms E4

9 . At the initial hearing on 25 ^th October, 2022, the liquidators in this case, by which is meant Mr. Michael McAteer and Mr. Paul McCann who were appointed joint official liquidators of Treasury Holdings (the “Liquidators”), made an application to this Court to file 14 amended Forms E4 in the Companies Office. The application was to substitute the 14 Forms E4 which had been filed by the Liquidators over the previous seven years, for the years 2016 to 2022 inclusive.

10 . The need to file the amended Form E4s arose because of an error that had been made by the Liquidators, by the incorrect inclusion of information in those forms relating to solvent subsidiaries of Treasury Holdings. No criticism is made of the Liquidators in relation to this error, since errors occur all the time and in all walks of life.

11 . The Liquidators are also applying to this Court for their fees to be approved for the period 1 ^st July, 2021 to 30 ^th September, 2022 and for their lawyers' fees to be approved for the same period.

Were the Liquidators paying themselves for rectifying their own error?

12 . This Court was concerned that creditors should not be at a loss financially because of an error made by the Liquidators. To put the matter another way, this Court did not think that it should be approving fees payable to the Liquidators, or costs incurred by the Liquidators, for correcting errors that had been made by the Liquidators.

13 . With this in mind, on reviewing the affidavits in respect of these two applications, it became clear to this Court that costs were likely to have been incurred by the Liquidators in discovering and then correcting the error in the 14 incorrect Form E4s (as well as legal costs).

14 . This Court noted that in his affidavit supporting the application to file the amended Forms E4, Mr. McAteer stated, in respect of these errors, that:

“creditors of the Company have not been impacted, and there is no change to the expected return for creditors.”

15 . However, when this Court sought to satisfy itself that the creditors had not been impacted by the error, it could find no reference, in the affidavit seeking approval for the Liquidators' remuneration and legal costs, to the costs which were incurred by the Liquidators in discovering and resolving the Form E4 filing errors. In particular, it was not clear to this Court, from that affidavit, that the costs incurred in correcting the Form E4 errors were not included in the amounts sought to be paid to the Liquidators and their lawyers.

16 . For this Court, this raised, at the initial hearing, at least the possibility, that the Liquidators were proposing to pay themselves for the costs incurred in resolving the Forms E4 issue, in which case the creditors would be impacted by the errors.

17 . However, at the initial hearing, the largest creditor in this liquidation, NAMA, indicated, through its lawyer, that it had already agreed to the amount of the Liquidators' remuneration and legal costs. The sums involved were €290,395.92 to the Liquidator and €38,670.62 for solicitors and counsel.

Adjournment of the application to approve the Liquidators' fees

18 . In all these circumstances, this Court adjourned the approval of the fees and asked for clarity from the Liquidators on the amount of the proposed remuneration and legal costs which was attributable to rectifying the Liquidators' own error.

19 . At the subsequent hearing on 10 ^th November, 2022, the Liquidators, to their credit, confirmed in a frank affidavit that the original fees...