Decision reserved on Morrogh assets

The High Court yesterday reserved its decision on how some €6.2 million in assets of the failed Cork stockbroking firm, W & R Morrogh, should be allocated. The firm collapsed in April 2001 with liabilities of some €12 million.

Some 2,500 claims have been received for payment. Because there are insufficient assets to meet the claims, stockbroking firms which are members of the Stock Exchange must contribute 50 per cent of the amount which the Investor Compensation Company will determine is payable to its fund to meet the claims. The figure is likely to total several million euro.

The remaining 50 per cent will be funded by the other members of the fund.

Yesterday, after five days of hearing submissions from counsel for various client creditors and others as to how the assets should be distributed, Mr Justice Murphy reserved his judgment.

He must decide on two applications. The first is by Mr Tom Grace, receiver to Morrogh and manager of its assets, for a determination as to how the assets should be allocated.

The second is a claim by Anglo Irish Bank that it is entitled to £1.3 million sterling lodged at the direction of the Central Bank in a client account of the firm. The bank claims the shares in London Stock Exchange Ltd were pledged to it by Mr Stephen Pearson, a partner with the firm, as security for a loan advanced to Mr Pearson in his personal capacity.

The shares were subsequently sold in April 2001, around the time the firm collapsed and a receiver was appointed. The Central Bank directed the proceeds of sale be lodged to a client account of the firm.

Anglo Irish contends the Central Bank was ignorant of its claim when it made that direction and has brought a motion seeking the monies. The claim is being resisted by stockbroking firms because, they contend, the arrangement which Anglo Irish claims it had with Mr Pearson to take security gave no title to the bank. They also claim clients of Morrogh have a superior claim to the assets.