The liquidator of Custom House Capital (CHC) has selected Davy to manage the return of some client funds, with assets of a German commercial property fund set up by the failed firm on track to be transferred to Ireland’s largest stock brokerage in the coming weeks.
It is understood that the 135 investors in the fund will receive notification in the coming days about the transfer of the assets. The portfolio currently has an equity valuation of €14.5 million and gross value of €46 million, when debt is included.
The move follows a High Court ruling last July that the liquidators could start to distribute remaining clients' assets. However, as much of the funds are in the form of pension investments, investors can access them only in accordance with stringent Revenue rules. This means that asset managers are needed to make sure that regulations are not breached.
CHC's liquidator, Kieran Wallace of KPMG, is expected to transfer further pooled funds, mainly in the form of syndicated property funds and which currently have a combined equity value of about €120 million, to investment managers over the coming months.
Misappropriated funds
CHC imploded in 2011 after it emerged that the company had misappropriated an estimated €66.5 million from customers. The liquidator subsequently hired financial planning and investment advisory firm BCWM that year to help manage CHC’s client assets.
In December 2016, the High Court ruled that the CHC's former chief executive, Harry Cassidy, be disqualified from acting as a company director for 14 years. One-time investment director at the firm, John Whyte, received a 10-year disqualification, while former non-executive director John Mulholland was banned for 12 years.
Mr Justice David Keane said at the time that the conduct of all three was "deeply dishonest, continued over a protracted period of time until, for a variety of reasons, it could no longer be concealed".
As of July 2017, some 567 CHC investors affected by the scandal had received a total of €7.4 million from the State-run Investor Compensation Company (ICCL), according to its latest annual report, published last December.
However, there were still 1,414 claims that had to be validated at that stage, which the ICCL estimates could lead to a further €12.3 million of compensation payments.
The ICCL, set up in 1998 to provide a level of protection for retail clients of Irish-regulated investment firms, pays up to 90 per cent of the amount lost, subject to a maximum of €20,000, to each investor.
