Custom House Capital victims paid €11.3 million in compensation

Victims of the failed Custom House Capital have now recovered €11.3 million from the State’s Investor Compensation Company (ICCL), with the remaining payouts due by next summer.

CCL is an industry-funded legal vehicle and is responsible for compensating clients when regulated companies collapse. The latest annual report shows that the process of compensating more than 2,000 victims of Custom House Capital – who have been sitting on millions in losses since 2011 – has finally gained momentum in the 12 months to the end of July 2022.

ICCL said 93 percent of the Custom House Capital has now been fully processed. An estimated €751,000 in compensation has yet to be paid, but that is a dramatic improvement since July 2021, when most claims had not been certified due to legal uncertainty surrounding the case, which was finally cleared by the High Court late last year.

ICCL can pay up to €20,000 per client, although most Custom House Capital clients are owed far more.

However, in addition to compensation from the Investor Fund, the former clients are also entitled to the bulk of the monies resulting from the parallel liquidation of Custom House Capital, which was ordered to be liquidated in 2011 by the High Court and Kieran Wallace, a partner at KPMG, became appointed insolvency administrator.

The lawsuit followed a High Court inquiry by two central bank inspectors who found “systemic and willful misuse” of €66m in client funds.

The customers were predominantly bond investors.

In a separate update on the liquidation presented to the High Court in November, a solicitor for the liquidator, Kieran Wallace, indicated nearly €29 million in assets will be returned to the former clients in the near future.

This distribution will bring the amount of recovered embezzled funds returned to customers as a result of liquidation since the company went bankrupt in 2011 to €41 million.

The High Court has been told that the amounts recovered from the liquidator and trustee were significantly better than previously forecast – at €16m more from the sale of assets than estimated and forecast as recently as July 2020.

While the compensation process and liquidation are different, there is some overlap — one of the reasons why out-of-pocket payouts to investors have been so slow.

Claims for compensation must be authenticated by the insolvency practitioner before the ICCL can honor them.

However, the process was significantly delayed while the ICCL asked for clarification on an aspect of its legal powers.

Meanwhile, ICCL’s accounts show the entity has €88.1 million in funds in case of future needs raised by a combination of large and small financial institutions. Custom House Capital victims paid €11.3 million in compensation

Fry Electronics Team

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