Judge refuses to appoint examiner to First Equity

THE HIGH Court has refused to continue court protection for an asset management firm said to be insolvent with projects worth €1 billion but has placed a stay on that decision for 48 hours in the event of an appeal.

Mr Justice Brian McGovern yesterday refused to appoint an examiner to First Equity, which manages investment projects for some 400 high net worth clients, after finding the evidence put before the court by the company did not satsify him the firm has a reasonable prospect of survival. One of the conditions for examinership is that the court must be so satisfied.

A consortium which has invested more than €10 million with First Equity wants the adjournment to get further information as to whether the company has a reasonable prospect of survival.

Kieran Wallace, of accountants KPMG, was appointed interim examiner last month to First Equity on the petition of the company, which manages investment projects for 400 high net worth clients and institutional investors.

First Equity is the business name of Gallium Ltd. It was established in 1995 as a corporate finance and investment vehicle by Tom Dowling, who retains 65 per cent of the firm, and is managed by businessman Alan Barry, who has a 35 per cent stake. Its headquarters are in Dublin and it has offices in London and Los Angeles.

The group sought the protection of the court and the appointment of an examiner after saying cash flow difficulties meant it could not pay a 20 to 30 per cent annual coupon on unsecured loans for a total of €10 million.

In court yesterday, Gary McCarthy, for a consortium of investors in the group who claim they are owed €10.25 million, applied to the court to adjourn the company’s application to have Mr Wallace confirmed as examiner.

He said insufficient information had been put before the High Court to allow it decide the company has a reasonable prospect of survival. (The court must find a company has a reasonable prospect of survival before an examiner may be appointed.) Mr McCarthy said his clients had sought certain information from the petitioner after the application for an interim examiner was before the court on December 23rd last. They had received a letter on January 9th and an affidavit yesterday morning and needed time to put in an affidavit of their own.

Declan Murphy, for the company, said the application to adjourn would be fully contested. He argued the information supplied to the court was in no way insufficient, and any adjournment would leave the company “in limbo” and create uncertainty.

There was communication and e-mails between the parties, and it had been agreed that the matter could be discussed in the new year, Mr Murphy added.

Mr Justice Brian McGovern said he would hear the application for an adjournment today.