Two high-profile insolvency practitioners admitted overcharging about €8,500 in fees to correct a mistake of their own when they sought approval of their own fees of €290,395 and €38,670 of legal fees, the High Court heard.
The overload occurred as Mr Justice Michael Twomey sought clarification on the charges of Grant Thornton’s Michael McAteer and Paul McCann as liquidators of Treasury Holdings.
The judge said while he wasn’t criticizing the liquidators, he said it’s “simply human nature not to be as careful with other people’s money as you are with your own”.
In this case, the liquidators were appointed in 2012 by the National Asset Management Agency through development company Johnny Ronan and Richard Barrett Treasury.
The source of their fees and costs would therefore come from the taxpayer, since Nama, as the main creditor, is a state agency, the judge said.
In the years since, the liquidators have carried out their job of realizing as much of the Treasury’s assets for its creditors as possible, and part of their duties has been filing various paperwork with the Companies Office.
However, it was found that three solvent Treasury Department subsidiaries had been included in the Companies Office filing of forms, known as E4s, which contain a statement of the position of a company’s winding up.
Last month Mr McAteer and Mr McCann, both senior figures at Grant Thornton, petitioned the court to file 14 amended E4 forms spanning seven years to correct this error.
The trustees told the court in an affidavit that Treasury’s creditors “have not been adversely affected and the expected rate of return for creditors has not changed.”
However, Justice Twomey tried to convince himself of this, saying he could find no reference to it in the trustees’ application for approval of remuneration and attorneys’ fees.
The judge made it clear that he did not believe that the court should authorize insolvency practitioner fees/costs that included costs of correcting errors committed by insolvency practitioners.
He adjourned the matter to clear it up. He noted that Nama, as the largest creditor, had already agreed to pay the insolvency practitioners’ fees and legal fees.
When the case returned to him earlier this month, he said the liquidators confirmed “in their favor” that €8,536 was included in the original charges and costs, which “was due to their own error”.
The insolvency administrators would have reduced their own fees by 4,747 euros (to 285,648 euros) and the legal costs by 3,788 euros (to 34,882 euros), according to the judge in a judgment.
The administrators’ oversight and Nama’s failure to set it aside appeared to the court as “a reflection of human nature on two counts,” the judge said.
First, it made it clear that a person charging a fee – in this case, the trustee – is unlikely to be as diligent in verifying the accuracy of that fee as someone paying it out of pocket.
Second, it made it clear that a person who pays a fee out of pocket is more concerned about its accuracy than when a government agency – in this case Nama – pays it and where ultimately the taxpayer foots the bill.
These matters demonstrate the importance of courts “always looking out for the interests of taxpayers,” he said. While government agencies are represented in court, the taxpayer is never represented, although the taxpayer often foots the bill, he said.
The judge approved the remuneration and legal costs accounts in the reduced amounts.
He stressed the court has an important role to play in overseeing fees because of the “inevitable conflict” between the liquidators’ own interests in deciding what work to do in the liquidation and the interests of the creditors, whose returns from the fee for liquidation is reduced.
Government agencies can also ensure that money coming out of taxpayers’ funds is subject to the same scrutiny as if it came out of an individual’s pocket, he added.
https://www.independent.ie/business/irish/treasury-holdings-liquidators-admit-to-overcharging-on-nama-fees-42174549.html Treasury Holdings liquidators admit overcharging Nama fees